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Richa Mishra

South Korea accounts for 4.15 % of total FDI approvals from January 1991 till June 2002 (excluding the amount approved by ADRs/GDRs). This amounts to $2.63 billion as against the total FDI figure of $63.44 billion for the period.

NEW DELHI, May 14

KOREANS like to do business with India, bottlenecks notwithstanding. A study conducted by the Federation of Indian Chambers of Commerce and Industry (FICCI) on `India as destination for foreign direct investment in the 21st century: The Korean perspective' reveals that despite infrastructural constraints the companies expressed positive sentiments signalling that with "serious and concerted effort, India and Korea could become important business partners with more Korean investment finding its way into promising sectors in India."

South Korea ranks fifth in terms of cumulative foreign direct investment (FDI) approved from January 1991 to June 2002. A survey was conducted by the FICCI among Korean companies with operations in India.

"It is encouraging to observe that all companies making profits in their activities in India are looking at further expansion of the scale of their operations. As many as 50 per cent of the companies that are breaking even in their India operations are targeting expansion. Even 44 per cent of the Korean companies making losses in India are keen to increase activities in India," the study revealed.

As per statistics released by Ministry of Industry, South Korea accounts for about 4.15 per cent of total FDI approvals from January 1991 till June 2002 (excluding the amount approved by ADRs/GDRs). This amounts to $2.63 billion as against the total FDI figure of $63.44 billion for the period. In terms of cumulative (actual) inflows, South Korea accounted for 3.39 per cent of the total inflows. Sectors attracting FDI from South Korea are transportation, fuels, electrical equipment, chemicals (other than fertilisers) and commercial, office and household equipments.

South Korea also accounts for 2.78 per cent of the total technical collaboration approvals since 1991, with 203 collaborations being granted so far.

"The true picture is, however, reflected by actual inflow of FDI as against investment approvals. On an average, the rate has been found to be around 23 per cent covering the period from 1991 to June 2002," the study said.

Of the companies surveyed 70 per cent of the Korean companies rated the overall policy framework in India as average, while five per cent found it to be good. It has often been observed that ground level obstacles covering the whole gamut of labour laws, taxes, legal and regulator framework play an important role in deciding FDI in a country.

While 50 per cent of the respondents said there were no major ground level hassles in India with respect to foreign investment, 30 per cent were of the view that the hassles were negligible, the study said.

The respondents were also of the view that the single borrower limit should not be restricted to 15 per cent of the local capital of a bank and rather it should be based on their global capital. It was also suggested that the 15 per cent limit may be reviewed and banks be allowed to lend beyond this limit to a single borrower on a case-to-case basis depending on the merits of each case.

On using India as a base for exports to third countries, most of the respondents reported that they were either currently using India as an export base for third countries or seriously considering the option. Steel, automobiles, chemicals, textiles, recombinant and biological pharmaceutical items, IT hardware, consumer electronics to name a few were some of the products for which India could be used as an export base.

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