Reinvested earnings and inter-corporate debt accounted for almost half the inflows of foreign direct investment for April-September 2003.

Reserve Bank of India data shows that of total FDI inflows of $2.22 billion for the period, $1.16 billion came in as fresh equity, and $1.05 billion came from reinvested earnings ($738 million) and other capital ($320 million), which includes inter-company debt transactions.

The inclusion of reinvested earnings and inter-corporate debt marks a change in the FDI definition that the central bank instituted from June 2003 in accordance with International Monetary Fund norms. The new definition also includes equity capital of unincorporated entities, suppliers' credit and financial leasing.

Under the new definition, the RBI has revised the final FDI figures for the preceding three financial years. Reinvested earnings and inter-corporate debt continue to account for a substantial proportion of the inflows.

FDI for 2002-03 was $4.7 billion against $2.6 billion based on the old formula. For 2001-02 the revised figure stood at $6.13 billion from $3.9 billion and for 2000-01, the figure was $4 billion ($2.3 billion).

Projections based on the data puts the FDI inflows for the financial year 2003-04 at around $4 billion, which is lower than the final figure for the previous year.

Of the $1.7 billion fresh equity, $507 million came in through the Foreign Investment Promotion Board route, while $292 million came through the automatic (RBI) route.