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India to align FDI definition with IMF norms

India will soon align its definition of foreign direct investment with the International Monetary Fund standards by adopting a broader classification, a top government official said on Tuesday.

"An internal group comprising representatives from the Reserve Bank of India and the department of industry have recently submitted its report. The exercise is now on to align the FDI definition with the standard computation. We expect to complete the exercise within the next two-three months," industry secretary V Govindarajan said on Tuesday in New Delhi.

Speaking to reporters on the sidelines of a session on FDI at the India Economic Summit, he said the group is also examining whether changes in some of the present laws would be required to bring India's FDI in conformity to the IMF.

Earlier addressing the session, he said FDI definition in India was restricted mainly to hard cash unlike other countries which included non-cash such as technology and machinery in the FDI flows.

As per IMF definition, India's FDI definition excludes reinvested earnings, subordinated debt, overseas commercial borrowings which are included in other country statistics.

Referring to a report by the International Finance Corporation comparing India's FDI to China, he said there was a general perception that India's FDI regime was fairly liberal.

He pointed out that there had been a 60 per cent increase in the FDI inflows during the first half of this calendar year despite an estimation of a 27 per cent decline in global FDI inflows this year.

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