Chidambaram will attend a roadshow on investment opportunities in India hosted by Deutsche Bank and Barclays Bank in Germany's financial centre and will hold discussions with leading representatives of European companies and institutional investors.
He is expected to bolster investor confidence in the world's fourth largest economy by outlining the measures taken by the Indian government in the past months to further liberalise foreign investments in various sectors, including multi-brand retail, single brand retail, power trading exchanges, commodity exchanges, non-banking financial institutions, broadcasting and aviation.
He may also assure them that India's economy is on the path to recovery and will bounce back to 8 per cent growth, driven by continuing efforts by the government to implement economic reforms and to reduce fiscal deficit as well as by improvements in FDI inflows into the country and gains on the export front.
The government set a fiscal deficit target of 5.3 per cent of the GDP for the current year.
According to official estimates, the economy is expected to grow by 5.7 per cent in 2012-2013 and by 6.7 per cent in 2013-2014, but economic analysts forecast that growth for the current financial year will be around 5.5 per cent.
Economic growth during the second half of 2012-2013 slowed down to 5.3 per cent from 6.7 per cent in the corresponding period in the previous year.
Earlier this month, rating agency Fitch warned that the outlook for India's sovereign credit rating remained negative and a downgrade could be possible within the next 12 to 24 months.
FDI inflows into India declined by 13.5 per cent to $27.3 billion in 2012 from $31.5 billion in 2011, in spite
of a surge in global FDI inflows to developing nations, according to a report by the United Nations Conference on Trade and Development (UNCTAD).
The UN agency said in its recent report on global investment trend that for the first time in history, FDI
inflows to developing countries in 2012 surpassed the level investments in developed countries by $130 billion.
However, India's chances to attract more FDI inflows into the country have significantly improved following the steps taken by the government to further liberalise foreign investments, the report said.
The top sectors attracting foreign investments were services sector, construction development, telecommunication and computer software and hardware.
Mauritius maintained its position as the largest foreign investor in India in 2012 with a share of around 38 per cent, according to provisional estimates.
Singapore was the second largest investor, followed by the United Kingdom, Japan, the United States, the Netherlands and Germany.
Chidambaram will be visiting Frankfurt on the third leg of a four-nation tour to promote India as an attractive
destination for foreign investments.
Last week, he visited Hong Kong and Singapore and from Frankfurt he will leave for London to take part in similar promotion events there.