Coke Tops US Investment in India
By K.G. Narendranath
Times News Network
June 12, 2003

NEW DELHI: India approved foreign direct investment (FDI) proposals amounting to Rs 2,85,443 crore or $76,651 million from 1991-92 up to 2002-03. The actual inflows stood at Rs 1,32,533 crore or $32,974 million.

FDI from the US accounted for Rs 57,419 crore of the total approvals. The top-50 FDI approvals to the US amounted to Rs 31,114 crore or $8,762m.

Among the American MNCs that assumed the top slots on India's FDI chart were CocaCola, Enron, Mission Energy, Flour Damiel Inc, CMS Generation, General Motors, Ford Motor, Folio Holdings, Hughes Electronics, Public Power International, Soros Fund Management, Panda Energy, Pepsico and CIBC. Coke had received approval to invest Rs 2,387 crore ($694m) to establish a 100% arm in September 1995 the largest-ever FDI approval in the eleven years since liberalisation. Through two of its arms, discredited power giant, Enron got the nod to invest a total of Rs 4,612 crore ($1,295m) in India.

The first FDI approval (Rs 1,464 crore) to Enron Power Development came in February 1993, followed by three more approvals to Enron Power Development and Enron International in March '03, July 97 and April 97. Among the major investments from US-based corporations, Mission Energy got the nod in August 1992 to invest Rs 1,541 crore in Hinduja National Power, Chennai to pick up 99.4% equity shares stake in the company. Fluor Damiel got the approval to pick up 40% equity stake in PRA Petrochemicals, Delhi with an investment of Rs 1,139 crore.

CMS Generation in December '94 picked up 75% equity stake in Development Consultants, Kolkata with an FDI infusion of Rs 947 crore and General Motors was given the nod to set up a 100% arm in the country in February '92 by making an investment of Rs 887 crore. The average FDI realisation rate ratio of approvals to actual inflows in the last eleven years stood at about 46% in rupee terms and over 42% in dollar terms. In fact, the largest realisation rate of 191% was recorded in '02 (Jan-December). During the year, the inflows stood at Rs 21,286 crore as against approvals of Rs 11,140 crore. This was a quantum jump, considering that the rate of realisation of FDI in the previous years were 71.6% ('01), 52.2% ('00) and 59.4% (1999).

Although the US-based corporations were among the biggest investors in India during the years of economic liberalisation, it is believed that they had also been among the most hesitant to re-invest their earnings in the country. It is expected that the data being captured by the RBI on reinvestment of earnings would expose the US investors predilection to re-invest their earnings in India.

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