Foreign Collaboration Proposals Stagnant For Last Three Years

The number of foreign collaboration proposals being received by the government over the past three years has remained stagnant, as per data made available by the Secretariat for Industrial Assistance (SIA) of the union commerce and industry ministry.

The government approved 765 proposals -- 125 technical collaboration and 640 cases involving foreign investment -- during the first four months of the year (January-April 2001). On an annualised basis, this works out to 2,295 proposals as compared to 2,144 cases received in the whole of 2000 and 2,224 cases in 1999. Since the number of cases rejected is minuscule, the figures on approvals is a fair indication of the number of proposals being received by the government.

Government officials, however, attribute the stagnancy in number of approvals being received primarily to the fact that a majority of foreign companies have already made an entry into the country. It is yet difficult to explain why these companies are not pumping in fresh foreign investments.

The SIA data shows that total proposals involving foreign investments (and not technical collaboration) had reached a peak between 1994 (1,355) and 1997 (1,665) and then came down to 1,191 in 1998 to rise again in 1999 (1,726). It then remained at the same level of 1,726 in 2000. In the first four months of 2001, 640 such proposals had been received.

The total amount of foreign investment in value terms approved during the past years has been very erratic. From Rs 141.9 billion in 1994 to Rs 320.7 billion in 1995 and Rs 548.9 billion in 1997, it declined to Rs 308.1 billion in 1998 and to Rs 283.7 billion in 1999. In 2000, the amount of FDI approved increased to Rs 370.4 billion and in the first four months of the year, proposals have been approved involving FDI worth Rs 119.1 billion.

Officials pointed out that there were hardly any meeting of the FIPB in the past two months. The post of chairman, FIPB remained vacant for over a month and the powers could not be delegated to any of the other members of the Board.