[Dec 2007, Volume 4 Quarterly Issue] Pdf File size - The IIPM Think ...

MORE MARKETS, LESS GOVERNMENT
servers [see, for instance, Kumar (1995)
& Pradhan (2007) 15 ] that the bulk of
India’s outward FDI during 1970s and
1980s was in the manufacturing sector,
primarily in light engineering, pharmaceuticals,
chemicals and textiles. Along
with the increasing geographical diversification
of outward FDI from the
country, a sectoral diversification (towards
services) also started taking place
in the early 1990s. Although in case of
certain services like, communication
and software, broadcasting and publishing,
engineering and construction, and
hotels and restaurants, outward FDI
from India has been rising; manufacturing
sector still accounts for a major
chunk of total outward FDI from India.
Table-2 presents the sectoral composition
of outward FDI flows from India
during the period from April 1999 to
October 2006. In this period, the largest
amount approved for overseas investment
was in the manufacturing sector
(at $11093 million) followed by non-financial
services sector (including software
development), trading sector and
other activities (see Table-2). Over this
A sizable chunk of Indian outward FDI has been
going to the tax havens or offshore financial
centres like Mauritius (10 percent), British Virgin
Islands (4.5 percent), and Bermuda (3 percent)
period, the share of manufacturing sector
was 53 percent while that of non-financial
services was 33 percent and that
of trading was 5 percent. An almost
similar pattern emerges for the period
Table 1: Geographical Distribution Of Approved Outward FDI Flows From India
(Top 15 Destinations)(Million $ )
Rank Country April 1996 to
March 2002
2002-03 2003-04 2004-05 2005-06 2006-07 * Total Share
(in%)
1 Russia 1748.7 0.2 1.4 1076.2 1.2 3.0 2830.6 12.78
2 USA 1540.8 185.3 207.1 251.4 270.3 313.4 2768.3 12.50
3 Mauritius 618.3 133.4 175.6 149.4 332.7 741.4 2150.7 9.71
4 U.K 410.6 34.5 138.5 71.9 158.3 1335.9 2149.6 9.71
5 Netherlands 157.9 15.9 30.2 30.7 284.6 1005.5 1524.8 6.89
6 Singapore 153.0 46.8 15.9 239.3 200.5 499.5 1154.9 5.22
7 Sudan - 750.0 162.0 51.5 63.0 118.1 1144.7 5.17
8 British Virgin Island 776.5 3.3 4.9 131.4 29.5 39.0 984.7 4.45
9 Cyprus 1.9 - 0.0 1.9 13.4 701.6 718.8 3.25
10 Hong Kong 445.1 14.8 16.2 73.6 88.8 41.5 679.9 3.07
11 Bermuda 232.6 29.0 142.5 221.3 2.6 627.9 2.84
12 UAE 110.2 12.6 32.1 41.9 141.0 205.3 543.0 2.45
13 Australia 7.0 95.0 92.9 158.8 75.3 95.2 524.1 2.37
14 Brazil 13.0 5.2 5.0 17.2 420.1 6.7 467.2 2.11
15 Canada 5.6 2.3 0.7 0.8 3.5 397.8 410.7 1.85
Total Outward Investment
7543.1 1472.1 1450.9 2804.0 2859.1 6003.9 22142.9
All Developed Countries
(Share in%)
All Developing
Countries (Share in%)
2608.8
(35)
4934.2
(65)
396.6
(27)
1075.5
(73)
774.0
(53)
676.9
(47)
799.6
(29)
2004.3
(71)
1015.4
(36)
1843.6
(64)
Source: Compiled from data given in the website of Department of Economic Affairs, Ministry of Finance, Government of India.
Note: * April-October 2006.
4073.9
(68)
1929.8
(32)
9668.4
(44)
12474.4
(56)
THE INDIA ECONOMY REVIEW
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