Foreign direct investment inflows to India has been low compared with other emerging market economies.

The annual average FDI and foreign portfolio investment for 1997-2001 shows that inflows to India were lower than those to Argentina, Brazil, China, Korea, Thailand and Malaysia.

The RBI Report on Currency and Finance says India's failure to attract enhanced inflows of FDI strongly underlines the need of further reforms in this context.

Even as the foreign companies have generally performed better than the domestic companies, FDI to India has been attracted mainly by the lure of the large Indian market.

The report has also said that around 15 per cent of the total infrastructure financing may have to come from foreign sources.

"Since the ratio of infrastructure investment to GDP is projected from 5.5 per cent in 1995-96 to about 8 per cent by 2006, with a financing of about 15 per cent, foreign capital of about 1.2 per cent of GDP has to be earmarked only for the infrastructure to achieve the GDP growth rate of about 8 per cent," the report said.

Mauritius has also in recent years become an important source of FDI inflows in the recent years. The pattern, according to the report, highlights the role of tax policies in influencing the pattern of FDI flows at the global levels.

The report also said that NRI deposits have emerged as a major source of capital inflows during 1990s.

There has also been an increase in the proportion of local currency denominated deposits from around one-fourth in 1991 to almost two-third by 2002 and a substantial decline in short term NRI deposits.

The outstanding NRI deposits in the country grew steadily from $13.7 billion at the end of March 1991 to $25.2 billion at end-March 2002.

Deposits under the FCNR(B) scheme increased from $1.1 billion at end-March 1994 to $9.7 billion at end-March 2002 while in the RE(E)RA scheme deposits increased from $3.6 billion in end March 1991 to $8.4 billion in March end 2002.

Also, in the non-repatriable rupee dominated denominated NR(NR)RD scheme the balance increased from $621 million in 1993 to $7.1 billion in March end-2002.