The Hindu Business Line : 36% foreign cos making profits: FICCI survey

According to the report, policy issues have shown a marked improvement over the last year with 93 per cent of the respondents saying that handling of approvals at the Central level is good to average and policy-related issues such as funds flow mechanisms are effective .

NEW DELHI, April 18

AROUND 36 per cent of the foreign companies operating in India are making profits while another 25 per cent have already broken even. Satisfied with their functioning in the Indian market, 51 per cent of the foreign investors are planning expansions in the near future.

These are some of the findings of `FDI Survey - 2002' released on Thursday by the Federation of Indian Chambers of Commerce and Industry (FICCI) on a sample of 385 foreign companies having investments between Rs 10 crore and Rs 850 crore each and representing around 70-80 per cent of the country's total FDI.

This is the second yearly survey on FDI conducted by FICCI. On the policy front, according to the survey, there is very significant development.

According to the survey report, policy issues have shown a marked improvement over the last year with 93 per cent of the respondents saying that handling of approvals at the Central level is good to average and policy-related issues such as funds flow mechanisms are effective.

Interestingly, at the State level, the problem of handling approvals is still quite cumbersome. The survey points out that 49 per cent of the respondents have found State-level handling of approvals to be average while 38 per cent said it is bad.

Compared to last year's FDI survey, there is a negative shift in responses regarding market growth conditions and the parameters related to regulatory framework and ground-level hassles at the State level.

Around 74 per cent of the respondents have reported that ground-level hassles are very high and reforms are urgent. Out of the 385 companies included in the survey, 43 per cent have described the existing tax regime to be a very serious problem while the remaining said that it is quite serious and rationalisation is necessary.

Another area of serious concern is the regulatory framework. According to the survey, the regulatory framework is becoming more of an impediment particularly due to lack of transparency and user-unfriendliness. It is evident from the fact that while in last year's survey, 12 per cent of the respondents said that the regulatory framework was good, in this year's survey the number has come down to nil.

However, there is marked improvement in vital areas like telecom, power, transport, etc., on which the responses of the foreign companies have shown significant increase in satisfaction levels.

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