FDI Approvals in 2004

The FDI Approvals in 2004 effected stupendous growth of the Electrical equipment, Drugs & pharmaceuticals, Consultancy services, Fuels and Metallurgical industries of India. The bulk of the FDI were absorbed by the Indian states of Delhi, Maharashtra, Karnataka, Andhra Pradesh and Gujarat. This helped the Indian economy to grow by 6.9% during the same period.

The FDI Approvals in 2004 maintained its growth momentum in spite of a deficient south-west monsoon, rising in international prices of oil, rise in steel price and devastating tsunami which caused extensive damage to life and property in Indian states of Andaman & Nicobar, Tamil Nadu, Kerala, Andhra Pradesh and Pondicherry.

FDI Approvals in 2004 in a nutshell:

The FDI inflows in India registered impressive growth during the first six months of 2004-05. A cumulative quantum of US$ 2.38 billion were received during April-September 2004 and around 835 FDI approvals were granted during the same period. The main countries facilitating the inflow of such FDI were Mauritius, USA, Netherlands, Germany and Japan. The sectors receiving the most FDI were Electrical equipment, Drugs & pharmaceuticals, Consultancy services, Fuels and Metallurgical industries. The Indian states which received the major portion of the FDI were Delhi, Maharashtra, Karnataka, Andhra Pradesh and Gujarat.

The FDI Approvals in 2004 in India and its effect on the Indian economy are as follows:

• The Indian economy grew by 6.9% in 2004-05
• Year-on-year WPI-based inflation was 5%
• The drought in 2002-03 reduced the growth rate to 7% in the agriculture and allied sector which bounced back to 9.6 %
• The industry growth stood at 6.6%
• The services sector growth rose to 9.1% from 7.9% in the previous year
• Growth in the industry and services sectors was spearheaded by sectors like manufacturing, public utilities, the trade, hotels, transport and communication group, and community, social and personal services
• The GDP grew by 7.4% in the first half and 7% in the second half of 2004-2005
• In the second quarter of 2004-05, excise and customs duties were reduced on selected petroleum products to check inflation
• Reverse-repo-rate was hiked to check liquidity overhang in the system
• After April 2004, the rupee depreciated against other major non-dollar global currencies (Euro, Pound Sterling and Yen)
• The exchange rate of the rupee was flexible in response to market conditions in 2004-05
• India's foreign exchange reserves continued to rise and with such reserves (including gold, SDRs and reserve position in IMF) reaching an estimated level of US$128.91 billion on February 4, 2005 in excess of India's total external debt of US$114 billion at end-September, 2004
• Moderate growth of 23% was registered in net invisibles surplus
• Software services exports registered 28.7% growth
• Merchandise export growth stood at 25.6% and the main drivers of growth were sectors like engineering goods, gems & jewelry, textiles, chemicals and related products, and petroleum products
• India broadened its trade horizons and took active participation in WTO negotiations along with a number of other bilateral trade agreements

Last Updated on 05/07/2011