FDI in services sector will be without any cap, says Nath

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14 FDI proposals worth Rs 826 crore cleared

New Delhi, Dec 18: Commerce and industries minister Kamal Nath has said with changes in laws governing small and medium enterprises, FDI would be allowed in the services sector without any cap.

Releasing the figures for FDI inflows in the country on Tuesday, Nath said the new Micro, Small and Medium Enterprises Act does not provide for a 24% equity cap on any industrial undertaking in the SSI sector.

FDI equity inflows rose 65% to $7.2 billion during the first seven months of the current fiscal from $4.4 billion in the corresponding period last year.

India retained the second place in the AT Kearney 2007 FDI Investment Confidence Index, a position it has held since displacing the United States in 2005.

India is the second most preferred location for investors in Asia and USA. However, for European investors, India has claimed the top slot, displacing China.

Among the major sectors receiving inflows were services with $1.6 billion, telecom ($0.9 billion), housing and real estate ($0.7 billion), construction activities ($0.7 billion), electrical equipment ($0.5 billion) and computer software and hardware ($0.3 billion).

Major foreign investments during 2007-08 were from Vodafone Mauritius Ltd ($801 million in the telecom sector), Matsushita Electric Works ($342 million in electrical products), GA Global Investments Ltd ($258 million in stock exchange), Emaar Holdings II ($204 million in construction of residential buildings), Merrill Lynch Mauritius Investments Ltd ($166 million in other banking activities).

FDI inflows for 2007-08 till the second quarter have exceeded the inflows received for the entire year in 2005-06. The growth in 2007-08 is in comparison to 2006-07, when the FDI inflows peaked at unprecedented level of $15.7 billion.