Page 240 - DMGT401Business Environment

Unit 10: Foreign Trade

Notes
of 5 crore so that it could use India as the manufacturing hub for the SAARC and other
Asian markets near India . ( Economic Times (29.11.2001) ‘India to be Faber’s production
hub for SAARC’)
Philips plans to use India as a manufacturing base to source a range of products for
international markets with an intended investment of $150 million within the next 5 years
(Times of India (4.9.2003) ‘Philips to make India export hub’). The company also decided to
double its employees to 2000 in next three years in its Bangalore software development
center (Economic Times (4.9.2003) ‘Philips to hire 1,000 for B’lore operations’). Same Deutz-
Fahr, the third largest tractor firm in the world also expressed its intention of using India
as an export hub for international markets including North America. (Business Line
(17.9.2003) ‘Same Deutz-Fahr tractors to make India an export hub’). The company has
already exported its tractors in small numbers to Israel, Colombia, Zambia, Sri Lanka and
Chile leveraging its manufacturing facility located in Ranipet, Near Chennai with a plant
capacity to manufacture 7000 tractors and 10000 engines. Hyundai, the carmakers which is
already using India as a export hub is planning an additional investment of about
$200 million to increase the production capacity to four lakh units annually (Business Line
(18.9.2003) ‘Hyundai’s exports eat into domestic sales: Three-week backlog in local market’)
The company had exported a total of 9000 units in 2002-03 and has set an export target of
30000 vehicles for 2003-04.
In 1998 Hyundai Motors built a $614 million auto assembly plant in Chennai in the face of
deep skepticism expressed by many industry analysts about India’s potential as an export
platform. Many other foreign companies such as Ford Motors, Suzuki, Bosch, Timken,
MICO, SKF Bearings, Daimler-Chrysler and FAG Bearings have already begun using
India as an export platform.
Pohang Steel Company (Posco) of South Korea signing a landmark MoU for setting up a
steel plant at Paradip with a total investment of $12 billion ( 51,000 crore).
Table 1 present figures on FDI actual inflows of foreign direct investment from 1992-93-
2003-04. The actual flow shows fluctuating trends in different years. It an peaked at
US $ 4700 million in 2002-03 and was its lowest at US $ 279.5 million in 1992-93. The trend
shows an upward direction which is very significant for the country.

Table 1: FDI Inflow in India (year wise )
Year Amount in Million US $ Share of total Inflow
1992-93 279.50 1.06
1993-94 369.00 1.41
1994-95 872.10 3.32
1995-96 1418.00 5.40
1996-97 1091.60 4.16
1997-98 3560.00 13.56
1998-99 2000.00 7.62
1999-00 2160.00 8.23
2000-01 2340.00 8.91
2001-02 3900.00 14.85
2002-03 4700.00 17.90
2003-04 3570.00 13.59
Total 26260.20 100.00

Source: Ministry of Commerce and Industry (Department Indian Policy and Promotion)
Contd...

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