FDI INFLOWS AT A RECORD HIGH: MARAN
MEETING OF PARLIAMENTARY
CONSULTATIVE COMMITTEE ON
COMMERCE AND INDUSTRY HELD
India’s performance on the foreign direct investment
(FDI) front has been both promising and reassuring with FDI inflows
into the country registering a record high of US $ 4.06 billion
(net of ADRs/GDRs) during the financial year 2001-02, which is
about 65% higher than the FDI inflows received during the preceding
year 2000-01 and further, this growth is being sustained during
the current year 2002 as well, Shri Murasoli Maran, Union Minister
of Commerce & Industry, said while chairing the meeting of
the Parliamentary Consultative Committee attached to his Ministry
here today. The Minister said that FDI inflows continued to post
an impressive growth during 2002 with cumulative inflows during
January-May 2002 (net of ADRs/GDRs) estimated at US $ 1.89 billion
as against US $ 1.18 billion received during the corresponding
period of 2001, thereby registering a substantial growth of 60%.
Stressing that this had been achieved in a time when there has
been a steep decline in global FDI inflows, Shri Maran said that
"this is highly reassuring as it is a reflection of the investor
confidence as also an acknowledgement of the progressive reforms
being carried out by the government". The Minister quoted from
The Economist of London which in its recent issue had observed
that "India is reforming more than it often gets credit for. Last
year’s record inflow of FDI may be an acknowledgement of this".
Shri Maran announced that a Committee comprising
representatives of Reserve Bank of India (RBI) and the Department
of Industrial Policy & Promotion had been step up for adoption
of the international reporting/computation system for FDI and
said that the Committee would complete its work shortly. This
has been necessitated by the fact that FDI figures of India currently
do not include reinvested earnings and other direct capital flows
which form part of FDI as per the international practices of IMF.
A recent study conducted by the International Finance Corporation
(IFC) had in fact said that adoption of international standards
for computation of FDI would raise India’s net annual FDI inflows
to about US $ 8 billion, which would work out to roughly 1.7%
of India’s GDP, not far behind the 2% level achieved in China.
The strong performance of FDI, the Minister said, was a result
of recent policy initiatives taken by the government in terms
of automatic entry, removal of caps in most sectors etc., as also
the various investment facilitation measures contributing to improved
investors confidence. The Foreign Investment Implementation Authority
(FIIA) had been activated and on an average about 2000 responses
in a year were being given to investors and potential investors,
he said.
Interacting with the members on various issues,
Shri Maran agreed with a suggestion mooted by Shri Kapil Sibal
that the government should initiate a dialogue with the opposition
parties to evolve a common agenda encompassing key issues such
as labour reforms so that the country could achieve faster economic
growth through a collective approach. Besides Shri Sibal, other
members who participated were Shri P.C. Thomas, Shri M. Master
Mathan, Shri Brahmanand Mandal, Shri George Eden, Shri R.S. Gavai
and Shri Akhilesh Das. Shri Rajiv Pratap Rudy, Dr. Raman Singh,
Ministers of State for Commerce and Industry, Shri V. Govindarajan,
Secretary (IPP), Shri N.L. Lakhanpal, Secretary & DGFT and
other senior officers of the Ministry of Commerce & Industry
were also present. Members called for bold initiatives on the
agriculture front while underlining the primacy of agriculture
in the country’s economy; exploration of new export markets notably
Africa and greater involvement of States and agencies in the formulation
of trade and economic policies. Shri P.C. Thomas and Shri Master
Mathan and others highlighted the difficulties faced by growers
due to continued to fall in commodity prices including items like
tea and stressed the need to ensure remunerative returns to growers
by exploring new export markets for tea, rubber etc. The Committee
was informed that following a meeting with RBI and the Department
of Commerce rescheduling of loans had been approved for coffee
including 2 year moratorium on payment of principal while RBI
had directed the concerned banks to come out with a similar package
for tea which was expected to be finalised by this month end.
A 5-year Medium Term Export Strategy for tea was being prepared
by Tea Board through M/s. Accenture based on a study of competitiveness
of Indian tea.
On the country’s economic performance, Shri Maran
referred to RBI estimates of the likely GDP growth of 6% to 6.5%
during 2002-03 in comparison with the growth of 5.4% in 2001-02
and 4% in 2000-01, and NCAER survey showing that business confidence
index had gone up by 10.8% this year. He said that the 5-year
Exim Policy had been formulated with the objective of raising
India’s share of international trade to at least 1% from the current
level of 0.67% and special efforts had been made to encourage
exports of more employment generating sectors like agriculture,
SSIs etc., besides a series of steps to take Indian exports higher
up the value chain. The process of involvement of state governments
had also been strengthened with a substantial 10th
Plan provision of as much as Rs.1725 crore. Giving an update on
the Special Economic Zones (SEZs), the Minister said the Positra
SEZ (Gujarat) had completed financial closure; Nangunery SEZ (Tamil
Nadu) was about to take off with acquisition of land and financial
closure; Dronagiri (Maharashtra) was in an advanced stage and
in Kolkata, the gem & jewellery park at Manikanchan had been
given the status of SEZ. In all, 13 SEZs had been set up so far.
Referring to the industrial scenario, the Minister
informed that there had been an improvement in the production
of the Six infrastructure industries, which reflected a growth
of 5.8% in april-May 2002 as against only 1% in April-May 2001.
"The growth rate in production is particularly noteworthy for
Cement (10.1%), petroleum refinery products (8%) and finished
steel (6.4%%). The Society for Indian Automobile Manufactures
(SIAM) has also reported a quantum jump in May 2002, in the sales
of motorcycles by 51% and of commercial vehicles by 44%. These
two reflect the improved demand from rural areas and the growing
demand for freight movement", Shri Maran said.
