New Delhi, Jan. 8: The actual inflow of foreign direct investment in India between 1991 and September 2005 stood at about 60 per cent of the cumulative FDI approvals by the government during the period, says a study conducted by the industry chamber, PHDCCI.

“Though India has been able to attract FDI worth $5.5 billion in 2004-05 and $2.9 billion in the first half of 2005-06, it is disturbing to note that the percentage of actual inflows to cumulative approvals between 1991 and September 2005 still remains below 60 per cent,” the study says.

It points out that even though policy barriers have been progressively removed, administrative barriers, especially at state level, continue to be an impediment to attract foreign investments.

The industry is of the view that there is also a lot of delay in clearing new proposals, even after it gets the green signal from the foreign investment promotion board (FIPB).

“This is perhaps one of the reasons that despite having more liberal rules for FDI than in many countries which rarely allow more than 50 per cent foreign equity holding, India has failed to lure foreign investors in substantial numbers,” the study adds.

The chamber has urged for an effective mechanism to improve co-operation and co-ordination between the central and state governments in granting clearances to foreign investment proposals.

India Inc’s argument is that in some segments of the infrastructure sector, lack of transparent guidelines and bureaucratic delays are creating hindrances to the entry of foreign investors.

In other sectors, non-workability of build-own-operate-transfer and build-own-lease-transfer schemes are holding up the progress.

Foreign investment inflow, which stood at $97 million in 1990-91, reached a peak of $6,130 million in 2001-02. In 2002-03, it was $5,035 million, which fell to $4,673 million in 2003-04 but again rose to $5,536 million in 2004-05.

Out of the $5,536 million investment in 2004-05, the share of equity investments was $3,363 million, while reinvested earnings stood at $1,816 million and inter-company debt transactions of FDI entities (other capital) at $ 357 million.

The chamber cites a major concern facing the Indian economy has been the near stagnancy in domestic saving rate.