The liberal investment regime, rapid growth of the economy, strong macro economic fundamentals, progressive de-licensing of sectors and the ease in doing business has attracted global corporations to invest in India

And consequent to policy changes and procedural simplifications, FDI equity inflows have registered a phenomenal upswing. FDI inflows have recorded over five-fold increase in the last three years, from US$ 2.2 billion in 2003-04 to US$ 15.7 billion in 2006-07. Simultaneously, FDI share in India's GDP has increased from 0.77 per cent to 2.31 per cent.

Significantly, FDI has come to play an increasing role in the economic growth of the country. The share of FDI in total investment has more than doubled from 2.55 per cent in 2003-04 to 6.42 2006-07.

Destination India

According to the AT Kearney FDI Confidence Index 2007, India continues to be the second most preferred destination for attracting global FDI inflows, a position it has held since 2005. Similarly, UNCTAD's World Investment Report, 2005 considers India the 2nd most attractive investment destination among the Transnational Corporations (TNCs).

Clearly, India is in the reckoning. And the figures appear to be improving by the day. FDI equity inflows which totaled US$ 5.5 billion in 2005-06 grew by almost three times to US$ 15.7 billion in 2006-07. In fact, going by the international best practices for calculating FDI would place India's total FDI at US$ 19.5 billion in 2006-07 against US$ 7.72 billion in 2005-06, representing a whopping 153 per cent growth rate.

This huge inflow of FDI has in turn reversed the past trend, with FDI inflows overtaking the portfolio investment inflows by almost US$ 5.6 billion in 2006-07, according to the RBI's report on International Investment Position.

FDI inflow continues apace in the new fiscal with total FDI during April-February 2007-08 recording a growth rate of 70 per cent to US$ 20.1 billion from US$ 11.88 billion in the corresponding period last year, taking the cumulative FDI inflows during August 1991 to February 2007 to US$ 73.64 billion.