The electrical equipment industry attracted the maximum amount of foreign direct investment (FDI) in India during 2000-01, with the telecommunications and transport sectors occupying the second and third positions. According to a study conducted by The Associated Chambers of Commerce and Industry of India (Assocham) on FDI in the top five sectors of the economy, the electrical equipment industry attracted Rs 1,364 crore worth FDI in 2000-01, up from Rs 909 crore in 1998-99, when it was ranked at the fourth position.
In the year 1999-2000, the sector was at number three position, having received Rs 532 crore as FDI. The telecommunications sector attracted Rs 1,127 crore FDI in 2000-01. While the transport sector attracted Rs 865 crore, the chemicals and fuel sectors attracted Rs 498 crore and Rs 393 crore, respectively. The chemicals sector had attracted Rs 1,100 crore in FDI in 1998-99.
According to the Assocham survey, the service sector did not find a place in the top five in 2000-01. The sector was the fifth-largest FDI earner (Rs 859 crore) in 1998-99 and had attracted Rs 250 crore in 1999-2000.
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Assocham said that to attract larger chunks of FDI, the macro-economic scenario should be made more conducive.
"Steady improvement in the gross domestic product growth, lower levels of inflation, a stable exchange rate and a well-regulated capital market will help in reducing the risk perception about investing in India," the survey pointed out.
India also needs to upgrade its infrastructure and the focus should be on efficient transport, communications and financial systems, it added.
Moreover, Assocham said various laws relating to companies, foreign exchange, and the insurance and labour sectors should be amended to facilitate a more conducive environment for foreign investment.