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India losing out to China in FDI in hardware

India is losing out to its neighbours like Taiwan and China in attracting foreign investment in hardware sector mainly due to tariff and other policy deficiencies in contrast to the country's continued dominance in the export of software, the Economic Survey said.

"Very low investment is taking place in hardware industry and foreign investment is going to Taiwan, China, Brazil, Malaysia etc. There are problems in hardware production, which may be summarised as distorted tariff structure, poor infrastructure, high cost of finance, industrial, fiscal and Exim policy, labour laws and Inspector Raj and low volumes of production," Economic Survey 2001-02 said on Tuesday.

While the computer software industry is likely to witness a cumulative growth of over 52 per cent, the hardware industry is likely to grow by 11 per cent during the Ninth Five Year Plan.

The survey further noted that software exports would witness a lower growth of over 40 per cent during 2001-02 at Rs 400 billion against Rs 283.50 billion in 2000-01, which had translated into a 65 per cent jump, while the overall electronics hardware and computer software exports are projected to touch Rs 485 billion during the current fiscal.

"The computer software and services exports are amongst the fastest growing exports in the Indian economy. Even globally India is recognised as a major software player," the survey pointed out.

Taking note of the inability of the domestic software market to meet the growth targets in 2000-01, it said, "although the domestic market has been registering a healthy growth rate it has still not been able to catch up with the revenues of software export market.

PTI

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