Mkt Conditions To Hurt FDI Flow, Says Ficci Survey

New Delhi, June 27 | Updated: Jun 28 2004, 05:36am hrs
While security and terrorism concerns weigh heavily on the minds of foreign investors, factors like exchange rate volatility, hardening commodity prices and higher interest rates in their home countries may spoil the party as far as investment inflow into India is concerned, according to Federation of Indian Chambers of Commerce & Industry (Ficci).

Ground level hassles continue to be a major impediment for foreign investors. A substantial 88 per cent of respondents have said that ground level hassles in India are medium to high, Ficci stated in its Foreign Direct Investment (FDI) Survey 2004.

As far as infrastructure facilities in the country are concerned, there is still a lot of room for improvement. Transport, roads, power and water availability have been rated as bad by majority of the respondents, it said.

The quality of services being offered at ports and airports still leave a lot to be desired. No wonder 43 per cent and 42 per cent of the respondents respectively finds port and airport facilities in India to be below international standards, it added.

The time consuming procedures and systems to be complied with often leads to time and cost overruns, which is bothering the investors. Procedural delays have been rated as quite to very serious by 93 per cent of respondents.

About 69 per cent of respondents have assessed problems on account of the existing labour laws to be quite to very serious.

The survey, however, revealed an improvement in the perception of foreign investors with regard to the operational parameters and the prevailing market conditions in India.

The survey identified five thrust areas where a dedicated effort by the government would result in strong FDI inflows in the near to medium term.

These include information technology and related services, chemical & chemical products, rubber & plastic products, electrical machinery & apparatus and services sector. A large proportion of respondents from the aforementioned sectors have assessed India favourably as an investment destination, perceive opportunities for greater FDI in their industry and are planning expansion of their Indian operations, the report said.