Foreign direct investment
in the Indian
power sector dropped
13 per cent in 2010-11,
according to official
statistics. FDI stood at
$1,252 million in FY11 as
compared with $1,437
million in FY10. The decline
in power sector FDI reflected
broad trends with overall
FDI in the country falling by
as much as 25 per cent to
$19.427 billion in FY11 from
$25.834 billion in FY10.
The decline in FDI
notwithstanding, the
power sector has fared well
over the past three years in
terms of attracting foreign
investment, in relation to
other sectors. The share of
the power sector in India's
overall FDI has risen
consistently from 3.6 per
cent in FY09 to 5.6 per cent
in FY10 and further to 6.4
per cent in FY11.
It is also worth observing
that though the power
sector was amongst the first
to be liberalized, allowing
FDI in power generation
since the mid-1990s, it is
only in recent years that
foreign investors are
viewing the sector seriously.
Over 60 per cent of India's
FDI in the power sector
since April 2000 has come in
the past three years alone.
Untitled Document
Foreign Direct Investment |
($ million) |
| |
2008-09 |
2009-10 |
2010-11 |
Cumulative |
| Power |
985 |
1,437 |
1,252 |
5,900 |
| Overall |
27,331 |
25,834 |
19,427 |
129,716 |
| % share |
3.6 |
5.6 |
6.4 |
4.5 |
According to the latest
guidelines, 100 per cent FDI
is allowed in the power
sector, under the automatic
route, across generation,
transmission, distribution
and trading. FDI in the
power sector also include
that in renewable energy.
India is beginning to see an
increasing inflow of foreign
investment in the
renewable energy space—
mainly wind power and
solar energy.