January 24, 2002
'17'
STATES VYING WITH EACH OTHER TO ATTRACT FDI: MARAN
Shri Murasoli Maran, Union Minister for Commerce & Industry, has said that the states in India are today competing with one another to get foreign direct investment (FDI) and to give more concessions for this purpose. This is because, following reforms and liberalisation, all the States and Union Territories in India have got back their powers over industries with the result that the ultimate destinations of the investors are the States. "Therefore, every state is willing to roll a red-carpet for the investors and that has made things easier for the union government. No investor can ignore India either as a manufacturing base or as a market", Shri Maran said in his address at the opening session of The Economist 11th Round Table with the Government of India – "Time to Look Ahead" -- here yesterday.
Outlining the reform measures taken by the government, Shri Maran said that India had been progressively liberalising its FDI regime with a view to attracting greater inflows that would not only plug the savings-investment gap, but also enhance the outward orientation of the economy. A near-automatic investment regime had been put in place where most activities were now open to foreign investment on the automatic route without any limit on the extent of foreign ownership. Some of the recent initiatives taken to further liberalise India’s FDI regime include enhancement of FDI limits in sectors such as banking, certain value-added services in telecom; FDI upto 100% in the development of integrated townships and settlements. For the first time, the defence industry sector had been open to the Indian private sector participation with FDI permitted upto 26%, Shri Maran said. Focussing on the post-investment needs of the investors, a new body called the Foreign Investment Implementation Authority (FIIA) had been set up to review the progress of projects and iron out problems faced by investors. Similarly, 100% FDI had been permitted under the automatic route for all manufacturing activities in the Special Economic Zones (SEZs). "We have received very encouraging response to this bold policy and approvals so far have been given for setting up of 13 SEZs. Of these, the SEZ at Positra in Gujarat and Nangunery in Tamil Nadu are at fairly advanced stages of financial closure", Shri Maran said.
The Minister underlined that India satisfied all the traditional principal economic determinant of FDI – i.e., first, a big market with both policy and political stability, safety of investments and patents, and a democratic polity; second, profitability of investments in India with an easy exit policy and no restriction of repatriation of dividends; third, sustainable growth along with advantages of skilled and IT capability; and finally, varied investment opportunities from low technology to the most advanced ones. "All these things do not mean that we are fully satisfied with the situation. We are not. Still lot of improvements have to be done to create a better climate for foreign investment. We have to pay more attention to the development of infrastructure", Shri Maran added.