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INDIA BUSINESS WORLD - October 1st October 15th 2008
LITTLE IMPACT ON FDI, AUG INFLOWS RISE 180%: COMMERCE MINISTER
COMMERCE minister Kamal Nath has sought to allay apprehensions about the global financial sector meltdown affecting India. Addressing mediapersons as the Sensex nosedived, he said depreciation of the rupee was a ‘temporary’ phenomenon and did not reflect the fundamentals of the economy.
Mr Nath said foreign direct investment (FDI) flows into shot up a whopping 124% during the first five months of 2008-09, indicating that India was an attractive investment destination. In August alone, FDI flows went up 180%. “The position in India is very sound, sturdy and very resilient, which is demonstrated both by foreign direct investments and exports," he said.
India received $14.6 billion FDI during April-August 2008 as compared to $6.5 billion during the corresponding period of 2007-08, he said. "Our strong regulatory systems are the models for the global financial system because we have no bubble to burst," he said. He, however, conceded India would feel the impact of the financial sector meltdown. "In a globalised world, when the US and large economies or Europe are affected, it’s bound to cause some seismic tremors in countries like India.”
“The FDI target for the current fiscal would be met despite the finance sector turmoil,” he said. The FDI target for 2008-09 is $35 billion while the inflows in 2007-08 were $24.57 billion. Mr Nath said FDI increase must be seen as a positive sign in the context of global slowdown. The manufacturing sector received $5 billion during April-August, an year-on-year rise of 41%.
"We see in the US, in Europe, economies really in the hospital,”’ he said. "In India, with strong economic fundamentals, we have the confidence to tide over this global financial crisis."
"The bloodbath at the bourses is not a reflection of Indian economy that remains on a sound footing with the help of regulators," he added.
Major investments included Royal Bank of Scotland acquiring shares in Reliance Ports and Terminals for $382 million and DE Shaw Composite Investment pouring in $384 million in DLF Assets.
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