The Centre has decided to redefine foreign direct investment by including reinvested earnings of foreign companies in India, external commercial borrowings, inter-company debt transactions, loans, voluntary grants, financial leasing and trade credits.

A committee comprising Reserve Bank of India and industry ministry officials was asked to look into the issue.

Its preliminary report will be released after a meeting of the standing committee on balance of payments on June 20, and a final clearance by RBI Governor Bimal Jalan.

Based on the new definition, expected to be announced by the government this Saturday, India's annual FDI inflows for 2002-03 stands at around $9 billion, against $4 billion now.

Experts have maintained that by not adopting the definition of the International Monetary Fund, India has under-reported its annual FDI inflows for the past decade, and may have lost out on numbers to China, which claims to have attracted $40 billion worth of FDI on average for the past five years.

India does not consider investments by Indian firms routed through other countries (roundtripping) such as Mauritius or British Virgin Island as FDI.

China, on the other hand, receives around 40 per cent of its FDI through roundtripping from Taiwan, Hong Kong and Macau.

An RBI official said the committee looking into the matter had decided to treat its maiden report as "preliminary".

"We will continue to revise the definition from time to time based on our research and the data made available to us. We are including several items missing from previous definitions.

"Reinvested earnings of companies operating in the country, investments made through inter-company debt transactions and external commercial borrowings will now be accounted for as FDI. Since the change in FDI figures will alter balance of payment data, we need an endorsement by the standing committee on balance of payments," the source explained.