According to a study conducted recently by A T Kearney, India ranks second amongst the world's favoured FDI destinations. China leads the list as the most favoured destination. Brazil, UAE, and Vietnam are some of the prominent developing countries that are capturing increased attention of foreign investors.

On the FDI policy front, even though no major announcements were made by the government in December 2007, news appearing in the press indicated the UPA government's intentions to further liberalise the FDI rules, albeit at a slower pace. It was reported that, following the recommendations of the Union Ministry of Commerce and Industry, the UPA government has charted out plans to liberalise the FDI rules in the retail sectors, but in phases. In the first phase, which is expected to be implemented by 2010, FDI would seem to be allowed for consumer electronics and sports goods. The next phase will involve hiking FDI in a single brand from 51 per cent to 100 per cent and later extend the scheme to multi-brand retailing.

Though the Finance Ministry has not yet confirmed the above measures, it has reportedly decided to categorise mortgage guarantee companies within the non-banking finance companies (NBFC) category, for the purpose of FDI investment rules.

During the month, Indian FM radio operators requested the government to raise the FDI cap from the existing 20 per cent, to enable them to attract increased foreign investments. Further, they have also reiterated their longstanding demand to receive permissions to air programmes based on news and current affairs.

Though several foreign companies and investment funds have shown keen interest to invest in Indian commodity exchanges, they may have to wait a little longer for this. According to press reports, the decision to allow such investment inflows is not expected to be notified during the current fiscal. Earlier, it was speculated that the government would allow FDI in Indian commodity exchanges on the same lines as that of stock exchanges - a maximum 26 per cent FDI and 23 per cent from foreign institutional investors.

During December 2007, the Union Finance Ministry approved 19 proposals involving FDI. Among the proposals approved on 14 December 2007, major ones were the proposals by Global Broad Cast News Ltd and UK based Oil UK Ltd. The two companies plan to bring in FDI worth Rs.500 crore and Rs.200 crore, respectively.

The month of December also saw the Maharashtra government singing an MoU with the Bahrainbased Islamic investment bank - Gulf Finance House (GFH), to set up a $10 billion (Rs. 40,000 crore) SEZ. This is the highest single party FDI investment proposal, which has been signed by the state government till date. GFH proposes to set up the SEZ over 1,600 acres of land at Panvel near Mumbai. It will house software development, IT-enabled services, hospitality and entertainment units.