india on the rise

India is soaring across the board. It not only is clocking over 8 percent growth but with it is also attracting substantial foreign direct investment. India substituted the United States as the 2nd most attractive FDI location; up from 3rd place in 2004 and reaching it’s highest position ever. India’s software and it sector has attracted the eyeballs of many foreign investors but global investor interest in other areas is building up. India has raised FDI caps in the telecom, banking, petroleum, aviation and other sectors.
Foreign direct investment (FDI) in India leapt 41.5% in the financial year 2005-06, figures released April 29 .FDI rose to US$7.5 billion in the 12 months ended March 2006 from $5.3 billion a year earlier. In contrast, China drew $60.3 billion in FDI during calendar year 2005 and $14.25 billion in the first three months of 2006.although the dragon seems to be hot on its heels, India is for sure registering strong FDI growth on a year-to-year basis. India's FDI flows continue to be skill intensive, and concentrated in information and technology areas. India needs $150 billion worth of investments to upgrade the country's weak infrastructure over the next 10 years.
India for sure is on the right track of garnering those FDI as it is considering opening up FDI across a wide range of sectors that includes oil and airports.

FDI INFLOWS.
YEAR FDI ($ MILLION)
1990-1991 96
1998-1999 2380
1999-2000 2093
2000-2001 3272
2001-2002 4734
2002-2003 3217
2003-2004 2388
2004-2005(April –September) 1979
2005-2006(April- September) 2304
Source: The telegraph.

The above figures show that global investors are certainly interested in India. The latest data of Standard & Poor’s study (released in March 2005) predicts that India had one of the fastest FDI growth rates among individual countries – an annual average of 28 per cent between 1999 and 2005.
Bill Gates in his recent visit to India has announced that the Microsoft will invest around $ 1.7 billion over the next four years in India. Intel the largest computer chips company of the world has decided to invest over $ 1 billion in India. CISCO has announced plans to spend $ 1.1 billion over the next 3- 4 years in India. For Microsoft, India is emerging as a big market to exploit as Microsoft doesn’t have much in stake in China. Buying of shares to the tune of $ 1.5 Billion in Bharti Tele ventures by Vodaphone from Warburg Pincus is another big FDI inflow into India.
General motors (GM) are slated to pump in $300 million for its manufacturing facility in Maharashtra. Another gargantuan automobile company Honda will invest $200 million. Suzuki and Nissan have declared investments of $800 million and $700 million respectively. Mitsubishi chemicals have a $370-million investment plan in haldia. Mauritius-based Global Communication Service Holdings has invested $278 million in Aircel while Associated Financial Services Mauritius invested $120 million in Citi Consumer Finance.
The top ten investing countries were Mauritius, the US, Japan, Netherlands, the UK, Germany, Singapore, France, South Korea and Switzerland.
India has a huge network of technical and management institutions of highest international standards for development of excellent human resources Strategic location of the country for the third world markets particularly for the rapidly growing South and South East Asian countries is a major factor in pulling global investors into India. India has a large pool of English speaking people, which is another aspect of India being able to attract FDI.India has a burgeoning middle class that is roping in big money from foreign institutions with the hope of tapping such a large pool of middle class households.
Investors in the heavy and light manufacturing sectors have a positive outlook about India. The country's largest FDI pledge was won when (POSCO) Pohang Iron & Steel Company (South Korea) confirmed a $12 billion deal to set up a steel plant and in Orissa. The achievement of this deal is great sign of FDI boom applicable in India. The government has established (SEZs) special economic zones to bring about a spirited, export-oriented manufacturing sector.
India has signed an increased economic cooperation agreement with Singapore. This agreement will lead to increased FDI inflows from Singapore. Precisely, the deal allows Temasek Corporation and Government of Singapore Investment Corporation to buy 10 percent more equity in Indian companies than other investors. Temasek Corporation has already acquired a minority stake in ICICI bank and is scouting for acquisition of substantial stakes in promising companies. Several Singapore banks will be granted licenses to set up branches in India over the next four years.
Ever since the government opened up FDI in 1991,the telecom sector has been raking in the foreign moolah. According to the Investindiatelecom, an on-line
agency which tracks developments in the Indian telecom sector, Indian
telecom has grossed actual FDI worth Rs 9,576.40 crore during the period
starting from late 1991 to early 2003 and Rs 9950.90 crore till April, 2004. This is the highest inflow of FDI into the telecom sector in the world. Mauritius comes in second with FDI grossing Rs 6,855.83 crore during the period.

Country wise FDI inflow in TELECOM (AUG91’-FEB03’)
RANK COUNTRY FDI (Rs in crore)
1. INDIA 9576.40
2. MAURITIUS 6855.83
3. UK 866.15
4. USA 487.43
5. NETHERLANDS 306.05
6. THAILAND 221.16
7. SWEDEN 153.19
8. FRANCE 100.93
9. ISRAEL 80.00
10. HONGKONG 74.12
11. MALAYSIA 59.99
12. JAPAN 53.98
13. CANADA 41.16
14. FINLAND 35.58

Financial services investors have promoted India from 4th to 2nd most attractive FDI location. The rise of local players, ICICI Bank and HDFC Bank, along with foreign investors, has helped streamline India's underdeveloped financial sector.
Telecom and utilities investors rank India their 3rd most attractive destination, which could be because of the relaxation of ownership restrictions. In October 2005, the Indian government increased foreign ownership levels to 74 percent from 49 percent, which will spur the booming IT, industry. According to NASSCOM, the Indian IT software and services exports have grown from $5.3 billion in 2000 to $16.5 billion in 2005.
The fact that India has toppled the US to secure second position up from third will further strengthen the interest of global companies in spite of corruption and weak infrastructure .the signs of bringing in foreign money has never looked so good for India. In a report done by A.T.KEARNEY (FDI confidence index), India is ready to take the FDI world by storm. The high confidence that investors have for India speaks volumes about the streamlining of Indian FDI policy.