Gujarat riots, terror attack in the United States and SARS outbreak in South East Asia led to a massive fall in foreign direct investment in India during 2001-02 to 2003-04, according to an Assocham report.
FDI from the US, Japan, Germany, France, South Korea, Hong Kong and Singapore were on the rise during the period 1996-97 to 2000-01, but slipped during 2001-02 to 2003-04, a release, quoting Assocham President M K Sanghi who released the report, said in New Delhi.
The total FDI from the US approved by the government in 2001-02 stood at Rs 4,921.50 crore (Rs 49.215 billion), slipped to Rs 2,051.10 crore (Rs 20.511 billion) during 2002-03 and further declined to Rs 762.40 crore (Rs 7.624 billion) by the end of 2003-04. This fall is the result of 9/11 terrorist attack in the US and violence in Gujarat, he said.
FDI from the United Kingdom, approved by the government, was Rs 5,003.10 crore (Rs 50.031 billion) in the year 2001-02, but came down to Rs 1,809.10 crore (Rs 18.091 billion) in 2002-03 and slid further to Rs 502.20 crore (Rs 5.022 billion) in 2003-04, Sanghi said, quoting the study.
In the case of Japan, Singapore and South Korea, the spread of SARS in 2002-03 took a heavy toll and deterred these economies from investing in India as their FDI fell by over 50 per cent from 2001-02 to 2003-04 in India.
The FDI inflow from Germany, which was Rs 413.90 crore (Rs 4.139 billion) during 2001-02, tumbled down to Rs 253.10 crore (Rs 2.531 billion) in 2002-03 and continued its southward movement during 2003-04 to Rs 213.50 crore (Rs 2.135 billion), the report said.
The French FDI stood at Rs 67.98 crore (Rs 679.80 million) in 2001-02 and declined to a paltry Rs 43.40 crore (Rs 434 million) by the end of 2003-04.
Sanghi said the major reason for the decline of German and French FDI to India was not 9/11, but Gujarat violence and inadequate availability of infrastructure in India.
