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$10 bn shortfall expected in FDI targets - ASSOCHAM
04
Oct '08
With sustained global slowdown and now US financial crisis adding on to it, The Associated Chambers of Commerce and Industry of India (ASSOCHAM) apprehends a minimum of US$ 10 billion shortfall in India's FDI's target during current fiscal.

Aforesaid findings are arrived at a Survey of 400 CEOs conducted under aegis of ASSOCHAM on Realistic Assessment of FDI's inflow towards India Vis-à-vis Slowdown, Financial Crisis & Unabated Terror Activities in India in which 350 CEOs said that India could optimally receive about US$ 25-26 billion of FDI's in fiscal 2008-09 against the targeted volume of US$ 35 billion.

The Ministry of Industry & Commerce had set the FDI's target of US$ 35 billion for India for current fiscal when it announced its foreign trade policy sometimes in early this fiscal.

The other reasons cited for lower FDI's include adverse sentiments in the stock market, bottlenecks on infrastructure, no initiatives on disinvestments, rising interest rates and volatility on economic front mainly because of 2 factors which include adverse and serious impact of global slowdown and US financial crisis.

Releasing the Survey, the ASSOCHAM President, Mr. Sajjan Jindal said that nearly 300 CEOs hold a view that services sector followed by computer software and hardware, telecom, construction activities, housing and real estate will respectively receive FDI's in 2008-09 as happened in the last fiscal.

It may be mentioned here that the Ministry of Commerce and Industry had set the target of FDI's in last fiscal for US$ 30 billion of which, the total FDI received were to the tune of about US$ 25 billion.

Interestingly, as per the figures available between January 2008 to June 2008, India received FDI's to an extent of US$ 22 billion only.

During this period, FDI's flow from US towards India which happens to be the largest victim of slowdown and now that of financial crisis, could be only to the extent of US$ 1.3 billion.

This in percentage terms workouts to be 6.11% out of total FDI's of US$ 22 billion received by India between January to June 2008, points out the ASSOCHAM survey.

It adds that again between January-June 2008, FDI's through Mauritius route comprised US$ 43.95% (over 9 billion) and 10.9 from Singapore which works out to be over 2 billion. With these facts findings figure, one can imagine which way the FDI's would go towards India particularly from US, asked the ASSOCHAM findings.

ASSOCHAM President said that the financial year 2008-09 has begun with difficult times in which the inflationary pressures mounted beyond manageable limits, the adverse impact of which on Indian Incn has been substantial in the sense that the yearly profitability of Indian industry would suffer a beating to an extent of 15-20%.

The sentiments are extremely negative as not only industrial production has been falling because of manufacturing sector not doing too well.

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