The global financial crisis that spilled over into its second year choked flow of foreign direct investments into India in 2009, forcing the government to loosen rules for investments but it kept multi—brand retail off—limits to foreigners. In the first nine months of 2009, FDI dipped by 26 per cent to $21.4 billion from $29 billion a year ago. The total FDI inflow into India since 2001 crossed the $100 billion mark.
Although fund inflow was few and far between, FDI became the cause of confusion over ownership of seven Indian lending institutions, including ICICI Bank and HDFC Ltd. But the banks have maintained that they are Indian as they are controlled by Indian banking regulations, Indian Board and Management. While the Centre simplified norms aimed at attracting more FDI, it has yet to get the Insurance Bill approved by Parliament.
The Bill seeks to raise the FDI cap in the insurance sector to 49 per cent from 26 per cent. The year also saw the Organisation of Economic Cooperation and Development (OECD) and global firms including retail giant like Wal—Mart asking India to open the lucrative multi brand retail sector for FDI. However, it does not appear likely to happen in the near future.
