BBC NEWS Americas Africa Europe Middle East South Asia Asia Pacific Arabic Spanish Russian Chinese Welsh

 You are in:  Business
Front Page 
UK Politics 
Market Data 
Your Money 
Business Basics 
Talking Point 
In Depth 

Commonwealth Games 2002

BBC Sport

BBC Weather

Thursday, 9 May, 2002, 15:03 GMT 16:03 UK
India sees jump in foreign investment
Software programmer
The IT sector is driving the foreign investment boom
Foreign investment in India in the year to March shot up by 65% to $4.06bn (2.8bn) with the information technology sector the main driving force, according to government figures.

The Indian government has an annual target of $10bn for foreign direct investment (FDI), but has recently managed only about $3bn a year.

"The rise stems from increased investment in information technology, particularly back-office and in fact call centres," Gareth Price of the Economist Intelligence Unit told the BBC's World Business Report.

"There was a submarine cable laid between Singapore and India which probably had quite an effect, and export processing zones were redesignated so there would have been some industrial investment due to tax breaks," he said.

But he warned religious violence which has claimed more than 850 lives since February in the western state of Gujarat, India's second-most industrialised state, could affect future foreign investment.

Neighbouring China has recently attracted between $30bn and $40bn in foreign investment every year.

US access

Meanwhile, the US has called on India to cut red tape so more US companies can invest in the country.

"Excessive bureaucracy, government controls and protectionism limit the potential of the entrepreneurs of India, limit the potential of its workers and also the potential and interest of its trading partners," said US Assistant Secretary of Commerce for Market Access and Compliance, William Lash, at a meeting with business leaders in New Delhi.

India and the US have been expanding their political and strategic relations in recent months after India supported US forces fighting in Afghanistan.

Mr Lash also urged India to speed up economic reforms and lower tariffs to further boost trade, which has doubled to $12bn in the last decade.

Gareth Price, Economist Intelligence Unit
"The rise stems from increased investment in information technology, particularly backoffice and infact call centres."
See also:

07 May 02 | Business
India to halve stake in auto firm
18 Apr 02 | Business
India signs 'historic' US arms deal
06 Mar 02 | Business
India counts economic cost of riots
Internet links:

The BBC is not responsible for the content of external internet sites

Links to more Business stories are at the foot of the page.

E-mail this story to a friend

Links to more Business stories