Deepak Lalwani's India Report
Comment of the Day

April 25 2012

Commentary by David Fuller

Deepak Lalwani's India Report

My thanks to the author for his informative letter. Here is a brief sample:
Foreign Direct Investments (FDI) to February 2012 showed an increase of 55% at $28.4 bn compared to $ 18.5 bn in the same period last year. The fiscal year ends in March each year. FDI into India can be made under one of two routes. The automatic route (not needing Government clearance) or the approved route through the Foreign Investment Promotion Board (FIPB) which provides Government clearance. Most sectors are now under the automatic route. FIPB clearance is required in some sectors - mainly ones of national security or politically sensitive ones - atomic energy, defence, media, aviation, trade, telecoms, trade and multi brand retail. What is interesting is that with many sectors opening up over the years the share of FIPB approvals to total FDI has steadily gone down. For example, in the latest period only 9% of total FDI required Government clearance. This is the lowest in 5 years and reflects the growing openness of sectors to foreigners. But their disappointment is at the speed and that key sectors like retail and financial sector are not fully open.

David Fuller's view This is mildly encouraging but India has a long way to go in terms of improving governance.

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