FDI inflows may fall short of $30 billion target

According to the data released by the government, FDI inflows fell for the fourth time in the last five months to February 2009. In February 2009, the inflows registered a sharp fall of 73 per cent to $1.49 billion from $5.67 billion a year ago.

The cumulative FDI inflows during April 2008- February 2009 at $25.38 billion, indicates that the country will miss the target of $30 billion set for the year 2008-09. The initial target set for the fiscal 2008-09 was $35 billion.

According to officials in the Department of Industrial Policy and Promotion (DIPP), if reinvested earnings were also taken into consideration, the total FDI inflows during 2008- 09 would cross $37.5 billion.

During the current fiscal, the government is confident of attracting FDI inflows of $30 billion. With reinvested earnings the total is expected to surpass the $40 billion mark.

FIPB Clearance

In April 2009, the Finance Ministry on recommendations of the Foreign Investment Promotion Board (FIPB) cleared 22 proposals worth Rs 541.25 crore.

Prominent among the proposals was Tikona Digital Networks’ proposal for induction of foreign investment by issuing Compulsory Convertible Debentures (CCDs) and equity shares to undertake developing, establishing and operating infrastructure as a Category – A Internet Service Provider that will receive maximum FDI of Rs 237.26 crore.

Electrosteel Castings’ Rs 157.47 crore proposal was accorded post-facto approval for issuance of convertible warrants while Anant Raj Industries’ Rs 90.24 crore proposal was granted an ex-post facto approval for issuance of warrants converted into equity shares by the ministry.

In the Telecom sector, While Chorus Call Conferencing Services India was allowed to increase the FDI from the existing 51 per cent to 74 per cent of the paid up capital of the company, Nokia Corporation was permitted to set up a JV with 51 per cent participation by way of equity shares/CCDs/compulsory convertible preference shares for retail trading of products under the single brand.

A total of six proposals have reportedly been deferred by the ministry in April 2009. These proposals include one from World Space to provide/ undertake the activities of web based services and Quippo Telecoms Infrastructure’s proposal for conversion of operating company into operating-cum-holding company to make downstream investments and demerger of passive telecom infrastructure business approved by the High Court of Andhra Pradesh.

The Finance Ministry rejected the proposals of Indium IV (Mauritius) Holdings’ proposal to make investment in the units of Fund and of Al Khaleej Sugar International’s to review and amend the clauses of the FC approval.