Maharashtra Tops in FDI Approvals Since 1991

Chennai: | Updated: Dec 23 2002, 05:30am hrs
Maharashtra has emerged as a clear winner in attracting the inflow of foreign direct investment (FDI) ever since 1991 when the country opened its doors to foreign capital. However, other states, like Tamil Nadu and Karnataka, are fast catching up with pro-active policies of their respective state governments.

According to the data available, total FDI approval since August 1991 till June 2002 is estimated to be Rs 2,81,333.6 crore, of which 17.32 per cent or Rs 48,722.4 crore was cornered by Maharashtra. Delhi finished a distant second with Rs 33,806.5 crore, accounting for over 12 per cent of total inflows.

Tamil Nadu, called as the Detroit of India, managed to attract FDI worth Rs 23,470.3 crore (8.34 per cent) while Karnataka approved FDI proposals worth Rs 21,945 crore (7.8 per cent). Gujarat finished fifth with a share of 6.56 per cent of the total approvals aggregating Rs 18,453.2 crore.

Despite its pro-active image, Andhra Pradesh could only manage to attract Rs 13,092.24 crore of foreign capital, which works out to Rs 4.65 per cent of total FDI approvals during the period.

Notably, the foreign capital inflow seems to have only benefited a handful of developed states which have a well developed physical infrastructure and are traditionally forward-looking. For instance, the top five states Maharashtra, Delhi, Tamil Nadu, Karnataka and Gujarat together account for 52 per cent of total FDI approvals since 1991, while the rest is spread thinly among the remaining states. At least 22 states, including Punjab and Kerala (which incidentally have well developed social infrastructure), account for less than 1 per cent share in the total FDI approvals.

One implication of this could be the widening of regional disparity among the states leading to inter-regional imbalances as well as large-scale migration.

However, the tide seems to have been turning of late with the governments of the laggard states stepping up their efforts to attract foreign capital. Many states also are in the process of formulating their own FDI policy, which is well within the rule of the land, to attract the foreign capital. Keralas much touted Global Investors Meet (GIM) slated to be held next month is one such effort.