FDI IN IT SECTOR INCREASED BY A RECORD 700% IN THREE YEARS: KAMAL NATH
Date : 23 May 2006
Location : New Delhi
Foreign Direct Investment (FDI) into India’s information technology (IT) sector have shown a record increase of over 700% in the last three years, having gone up from Rs.543.66 crore in 2003 to Rs.4206.68 crore in 2005, Shri Kamal Nath, Union Minister of Commerce & Industry, informed the Lok Sabha in a written reply to an Unstarred Question today.
“FDI, apart from bringing in capital, brings in state-of-the-art technology, good management practices and improved skills to our employees, thereby enhancing competitiveness of the domestic industry in the international market. It also generates additional employment opportunities. Software exports have also increased in the IT sector in the last 3 years”, he said.
FDI upto 100% is allowed under the automatic route in the IT sector and IT-enabled services.
No new FDI guidelines have been framed for the IT sector. The extant guidelines were issued in 2000, he said.
In reply to another question in the Lok Sabha, Shri Kamal Nath indicated that FDI received in the Research & Development (R&D) sector during the last three years was US $ 26.05 million. FDI approvals issued for R&D amounted to US $ 27.23 million during the above period.
As per the UNCTAD survey 2004 contained in the UNCTAD’s World Investment Report 2005, India has a share of 25% of R&D locations among the developing countries. The survey ranks India as the sixth global destination for R&D offshoring.
The current policy permits FDI upto 100% on the automatic route in R&D services. In addition, income tax concessions are available under the Income Tax Act for earnings from R&D activities, Shri Kamal Nath said.