India has been able to retain its position as a preferred investment destination despite the global economic downturn, says the pre-Budget economic survey.
"FDI flows in 2008-09 were also reflection of the confidence of foreign investors in the growth prospects of the Indian economy. . .India continues to retain its position as a preferred destination for investments," said the pre-Budget economic survey tabled in Parliament on Thursday.
There has been an increase in foreign direct investment during 2008-09 over the previous year, it said.
With regard to foreign institutional investors, the survey said that there are signs that FIIs who had recorded net outflows in 2008-09 may have returned to the Indian market in the last two months.
In a recent UNCTAD study on assessing the impact of the current financial and economic crisis on global flows, it was found that India achieved a growth of 85.1 per cent in foreign direct investment flows in 2008, the highest increase across all countries, the survey said.
According to this study, FDI investments into India went up from $25.1 billion in 2007 to $46.5 billion in 2008 even as global flows declined from $1.9 trillion to $1.7 trillion during the period.
The survey has also suggested that FDI limit in defence industries be raised to 49 per cent(from 26 per cent) and allow up to 100 per cent FDI on a case by case basis, in high technology, strategic defence goods, services and systems that can help eliminate import dependence.
Besides, the survey also suggested increasing FDI cap in the insurance sector from existing 26 per cent to 49 per cent and for specialised insurance companies 100 per cent.
