FDI Inflows in India during 2006- 2007

Abstract:

FDI Inflows in India During 2006 - 2007 registered significant growth in comparison to the previous year. Sectors that attracted high FDI inflows in India during 2006- 2007 were real estate, construction activities, services sector, telecommunications and electrical equipments.

Foreign direct investment in India:

Liberalization of the Indian economy in the early 1990s boosted the inflow of Foreign Direct Investments (FDI) to India. It also helped to open Indian markets to foreign direct investment.

Further the government of India simplified the procedures for foreign direct investment in the country in order to encourage the foreign investors to invest in the country. Foreign direct investment in India, came from non resident Indians, international companies, and other foreign investors. FDI inflows to India grew significantly over the years and assumed significant proportions by 2006-2007.

Amount of FDI inflows in India during 2006- 2007:

The amount of FDI Inflows in India during 2006- 2007 that included, only the equity inflows, came to US$ 15.7 billion, which is a growth of around 185% in comparison to 2005- 2006. The amount of FDI Inflows in India during 2006- 2007 that included, reinvested earnings, equity inflows, and other inflows of capital, came to US$ 19.5 billion, which is a growth of around 153% in comparison with the previous year.

Sectors attracting FDI inflows in India during 2006- 2007 are:

• Real estate
• Construction activities
• Services sector
• Telecommunications
• Electrical equipments that includes electronics and computer software

Countries contributing to FDI inflows in India during 2006- 2007 are:

• USA
• Singapore
• UK
• Netherlands
• Mauritius

In 2006-07, FDI comprised 2.31% of the GDP of India. This was merely 0.77% in 2003-04. FDI comprised 6.42% of total investments in India in 2006-07 which was a significant growth 2.55% in 2003-04. The remarkable growth of FDI in India during 2006-07 had major impacts on the economic growth of the country boosting output and employment significantly.