New Delhi: The Indian government hopes to see foreign direct investment (FDI) inflows reach $26 billion (Rs1,06,658 crore) in the fiscal year ending in March 2008, a senior government official said on Wednesday.
“The goal for the current year has been stepped up to $26 billion in equity (foreign investment) and $4 billion in retained earnings of foreign firms,” Industry Secretary Ajay Dua told reporters.
The bulk of FDI is expected in sectors like auto, auto components, semi-conductor, electronic hardware, information technology and business process outsourcing, he said.
India’s trade minister Kamal Nath last week said the country attracted close to $16 billion in FDI during 2006/07, up from $5.5 billion in 2005/06.
According to an estimate of a government-appointed panel, India needs $1.5 trillion in investments to scale up factory capacities, improve infrastructure and boost farm output in the next five years to sustain 8% to 10% economic growth.
About $72 billion has to come from abroad as the cash-strapped government has to spend more resources for social projects like education and health.
“As a proportion of gross domestic product, FDI inflows are under 2.5% now....We have a long way to go,” Dua said.
Infrastructure projects like power plants, roads, sea ports and airports will need $320 billion in investments till 2012.
Total investment in infrastructure projects is still below 4% of GDP, Dua said, adding India has to double the figure to sustain high growth.