According to the data released by the Department of Industrial Policy & Promotion (DIPP), India, received Foreign Direct Investment (FDI) worth $2.58 billion (approx Rs 12,606 crore) in June 2009. When compared to $2.3 billion (approx Rs 11,237 crore) FDI received in June 2008 this indicates around eight per cent increase.

However, the April-June quarter of the fiscal 2009-10 saw a drop of 30 per cent in FDI on yo- y basis. The total foreign investment inflows during first quarter stood at $7.02 billion (approx Rs 34,398 crore), as compared with $10.07 billion (approx Rs 49,343 crore) in the corresponding period in 2008. Despite this setback, the Minister for Commerce and Industry, Anand Sharma, is confident that the global economic slowdown notwithstanding, the FDI inflows during 2009-10 will be at the year's level. During 2008-09, India attracted FDI of about $27 billion.

FDI Clearances

In August 2009, the Union Ministry of Finance, on recommendations of the FIPB cleared 10 FDI proposals worth Rs 1,123.059 crore.

Dish TV India's Rs 750 crore investment proposal was largest among the 10 proposals that got a green signal from the ministry. The proposed investment plan is to issue convertible bonds, convertible into equity shares to non-resident Indians, according to permissible laws. United Breweries Holdings's Rs 218.95 crore proposal got ex-facto approval for issuance of fully convertible equity warrants and for the allotment of fully paid up equity shares on conversion of convertible equity warrants. Besides, the ministry gave its nod to a Rs 97.99 crore proposal by the Madhya Pradesh based KS Oils to issue and allot warrants, convertible into equity shares to overseas investors. Also, SMS Siemag Atkiengesellschaf, Germany, has been given a go ahead to set up a JV company in India to manufacture, sell and commission single stand reversing cold mills, skin pass mills, compact cold mills and strip process lines. This plan envisages FDI of Rs 30 crore.

In all, nine FDI proposals have reportedly been deferred, including the one by EADS Deutchland GmbH, Germany and L&T to incorporate a manufacturing JV to undertake the production of defence equipment. Norway based Telenor Group's proposal to increase the foreign shareholding up to 74 per cent in Unitech Wireless (Tamil Nadu) was rejected yet again.

The finance ministry reportedly rejected the proposals of Asha Micro Credit, Cholamandalam DBS Finance and Cargil & Financial Services India.

Foreign Trade Policy, ray of hope for recession hit industries

The Union Government unveiled the Foreign Trade Policy (FTP) for 2009-14 on 27 August 2009. The newly-launched FTP which aims at giving boost to declining exports, has come as a ray of hope for the sectors reeling under recession.

The FTP aims at achieving an annual growth of 15 per cent with an annual export target growth of $200 billion by 2011. In the remaining three years, till 2014, it hopes to bring back India on the high export growth path of about 25 per cent. The FTP provides for an extended tax holiday, duty refund for exporters and allows duty-free import of capital goods.

To achieve this, the government is likely to follow a mix of fiscal incentives, institutional changes, procedural rationalisation, and enhanced market access across the world and diversification of export markets. It is likely to bring in improvement in infrastructure related to exports, cut down in transaction costs, and provide full refund of all indirect taxes and levies.