India had a selective foreign direct investment policy since its independence. It wanted FDI mainly as a source of supply of technology. While the Government of India considered aid as the main form of capital inflow FDI flow into India was very limited. Since 1991, India has liberalized its FDI policy. Several initiatives have been taken to enhance the flow of FDI into the country. Let us analyze here the trends of FDI in India. Look at Table 6.3 which shows inflows of foreign investments. There has been remarkable progress in the inflows of foreign investment. The country has witnessed significant growth in the inflows up to the year 1996-97. The inflows of foreign investment have decelerated during the year 1997-98 and 1998-99.
The county wise analysis of FDI inflows shows that Mauritius continued to be the largest source of FDI inflows followed by the USA for the year 1998-99. There has been substantial decline in inflows from these sources for the last two years. Japan, Italy and Germany were the third, fourth and fifth largest sources of FDI in the year 1998-99. Look at Table 6.4 which shows country wise FDI inflows.
The sector wise analysis of FDI inflows shows that during the year 1998-99 engineering sector continued to remain at the top of the list among the FDI recipients followed by the chemicals and allied products. Services sector were the third and Electronics and Electrical equipment were the fourth largest recipients of FDI for the year, 1998-99. Look at Table 6.5 which shows sector-wise FDI inflows.
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