The cumulative amount of FDI inflow in India in the year 2001 was to the tune of US $ 4.3 billion. Over 40% of the total foreign direct investment approved in India were through Euro issues. This resulted in an increased access to European countries.
A brief note on the FDI approvals in 2001 in India:
The quantum of FDI inflow in India in the year 2001 was US $ 4.3 billion. Interestingly, the quantum of such foreign direct investment approvals in India in the year 2001 recorded a dip.
This dip in the approvals of FDI inflow in 2001 was due to reduction in the number of foreign investors.
Further, this downfall in the numbers of such investors was on account of lack of fresh avenues for investment in India. More interestingly, the Indian markets witnessed a rise in the monetary value of such investments flowing in the Indian market system. This happened due to the strong growth of the Indian economy as a whole. In other words, it can be said that those foreign investors who operated in the Indian market prior to the year 2001, were quite upbeat about the positive growth of their investments made in different industries of India. The down fall in the numbers of foreign investors can also be due to the more investor friendly policy of other Asian giants like China, Malaysia and Indonesia. One of the reason for which the FDI in 2001 in India fell was the lower inflow of foreign direct investments in the telecommunications and software Industry in India than the previous years. The quantum of FDI inflow in the Indian telecommunication industry came down form US $ 235.2 million to US $ 2059 million during the said period. In the case of the Indian software industry the quantum of such FDI inflow came down to US $ 145.9 million from US $ 323.2 million. Further, the fall in the FDI in 2001 in the electrical equipment (excluding computer softwares) manufacturing industry of India, might be due to the flooding of cheap Chinese electrical goods in the Indian markets.
Positive effects of the FDI approvals in 2001 in India:
- Over 40% of the total foreign direct investment approved in India were through Euro issues
- A 23% of the increase in Foreign direct investment were being made by the Japanese investors
- Helped in technological up gradation
- Increased access to European countries
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