"The severity of the economic sanctions is gradually waning," industry minister Sikander Bakht told Rajya Sabha.

Responding to supplementaries during question hour, Bakht said several US-based companies were trying to find new alternatives for financing their projects in India.

"All eyes are on India because of its large market," Bakht said.He said that the Foreign Investment Promotion Board (FIPB) had cleared proposals involving foreign direct investment worth Rs 5,954.97 crore in June 1998 alone as against Rs 2,117.70 crore in June last year. During the last three months, the amount was Rs 1,500 crore, he added.

Bakht said that government was approaching non-resident Indians (NRI) for financing projects in the country.

Bakht said, "the government is closely monitoring the situationto ensure that sanctions have no adverse impact on overall industrial production.""Initiatives taken by the government to encourage foreign direct investment (FDI) and investment by non-resident Indians (NRI) and foreign institutional investors (FII) were also likely to make a positive impact in this direction," he said.

He said that the procedures for FIPB approvals have been simplified and more projects have been moved to the automatic approval route. "These measures are expected to lead to an increased inflow of foreign direct investment," he said.

Quoting a survey conducted by the Federation Indian of Chambers of Commerce and Industry (Ficci), on the impact of sanctions on infrastructure industries, the minister said Ficci concluded that projects in the power sectors were not likely to be adversely affected and would be able to raise finances from alternate resources.

This survey also indicated that in the telecom sector, the cost of borrowing might rise. "On the whole in the assessment of Ficci,the magnitude of the overall impact of sanctions on Indian industry will not be significant," he said.

Divestment in strategic sector PSUs ruled out

The government assured members in the Rajya Sabha that there would be no disinvestment in the public sector undertakings in the strategic sector.During question hour, industry minister Sikander Bakht said that though government had initially referred four PSUs to the Disinvestment Commission, these were withdrawn later.

He said that government was aware of the dissatisfaction expressed by the commission chairman G V Ramakrishna over the slow pace of disinvestment and said the matter was under consideration of his ministry.

He said that at the time of referring the PSUs to the commission, it was not considered necessary to consult the administrative ministries.

Moreover, at the time of processing the recommendations of the commission for acceptance, administrative ministry and PSU management are duly consulted.

Instrumentation Ltd revivalunder study

The government is studying a plan to convert the Palakkad unit of the state-owned Instrumentation Limited into a joint venture company, the Rajya Sabha was informed on Monday.

Industry minister Sikander Bakht told O Rajagopal (BJP) that under the plan formulated by the Instrumentation Ltd, the Palakkad unit in Kerala would not be tagged along with the loss-making Kota unit in Rajasthan. However, a final decision on this would be taken by the Board for Industrial and Financial Reconstruction (BIFR) to which the company has been referred to, Bakht said in a written reply.

Rajagopal sought to know whether the Palakkad unit could be made an autonomous one as the tagging of this unit with the one at Kota was proving to be detrimental to the employees of the Kerala unit.