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N-tests had no adverse impact on FDI inflows, Bakht proves with figures

Foreign direct investment or FDI between May, when India conducted the nuclear tests, and October this year was Rs 80.1 billion as compared to Rs 66.69 billion during the corresponding period last year.

Thus, the country has successfully avoided any adverse impact of economic sanctions on FDI inflows, Industry Minister Sikander Bakht told a meeting of the consultative committee of his ministry today.

The cumulative approval of FDI since 1991 adds up to about $ 46 billion (excluding global depository receipts or GDRs) and total inflows upto October this year are nearly $ 13.27 billion (excluding GDRs) giving a success rate of around 29 per cent.

This, adjusted to contingency and mutually exclusive approvals in power, telecom and liquefied natural gas sectors takes the success rate upto nearly 36 per cent, the minister said.

NRI inflows have been of the order of Rs 73.99 billion including NRI schemes approved by the Reserve Bank of India, indicating a fairly high success rate as well as confidence of NRIs in India's strong economic fundamentals, he added.

The minister said a sustained GDP growth rate of six per cent would require an average investment rate of 27 per cent to 32 per cent and FDI is the most desirable mode of bridging the gap in investments since the current level of domestic savings is around 26 per cent of GDP. Moreover, unlike portfolio investment, FDI is not volatile to quick reversals and is non-debt creating.

Answering questions on imbalance of FDI investments in relation to various states, the minister said that the choice of location of projects depends on the commercial judgement of the investors, basing on factors such as market size and growth, availability of skilled manpower and dependability of infrastructure.

The states which have accounted for major portion of FDI investments approved so far are Maharashtra, Tamil Nadu, Karnataka, Delhi, Andhra Pradesh, Gujarat, Haryana, Uttar Pradesh and West Bengal.

Bakht said FDI inflows in India have shown continuous upward trend (53 per cent growth in 1997 as compared to 1996). China is the only country apart from India in the south, east and southeast Asia where the FDI inflows have grown continuously.

UNI

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