INDIA HOPES TO EXCEL CHINA IN FDI INFLOWS
INDIA’S
INVESTMENT REGIME AMONG THE MOST OPEN IN THE WORLD – FOREIGN INVESTMENTS
ARE SAFE IN INDIA, MARAN TELLS SWISS INVESTORS
India
hopes to excel China in Foreign Direct Investment (FDI) inflows
and is striving hard to close the gap in FDI with China as a percentage
of GDP, said Shri Murasoli Maran, Union Minister of Commerce &
Industry at a Destination India Seminar at Zurich in Switzerland
last evening. Stating that India would continue the process of
liberalisation and create still more conducive environment
for FDI, Shri Maran assured the Swiss investors that their
investments were safe in India and the rate of returns high, while
emphasising that India’s investment regime was amongst the most
open and liberal in the world. That is why, he said, every year
FDI inflows into India were increasing. Last year (2001-02), Shri
Maran said, FDI flows into India had registered an impressive
increase – being the highest so far at US $ 4.7 billion – on a
conservative computation and it happened despite the global recession
following the September 11 terrorist attack in the US. The Minister
also cited the recent internal survey of the International Finance
Corporation (IFC) which said that the difference in FDI between
India and China as a percentage of GDP was a mere 0.3%. FDI accounts
for 2% of China’s GDP, while it accounts for 1.7% of India’s GDP.
The IFC survey also opines that business environment in India
is better than in China. "While our FDI target is US $ 10 billion
per year, some economists feel that our economy can absorb more
than US $ 20 billion", Shri Maran said.
Stressing
the attractiveness of India as an investment destination, the
Minister quoted from the FDI Confidence Audit conducted by AT
Kearney in February 2001, which said that the average expected
rate of return on investment in India was higher than that for
other comparable emerging markets. "The framework of an open society,
a democratic polity committed to the rule of law and committed
to respect all fundamental human freedoms guarantee these safeties",
Shri Maran said. "We are one of the top three fastest growing
economies in the world and as one economist points out, and we
believe, we would be a potential ‘Growth Star’ of the next decade.
We are not satisfied with this growth rate. Our Tenth Five Year
Plan 2002-07 aims at more than 8 per cent annual GDP growth so
that we can double our per capita GDP in a decade and make a significant
dent on absolute poverty. Our
macro-economic fundamentals are strong including the external
sector, with an inflation rate below 2%. Today, our forex reserve
is US $ 55 billion, the highest ever forex reserve held by our
Central Bank. That is why the United Nations Conference on Trade
and Development (UNCTAD) Report 2002 praises India for resisting
successfully the global slowdown", the Minister said.
Outlining
some of the major policy initiatives taken by the government,
Shri Maran referred to the introduction of Special Economic Zones
(SEZs) which would open up massive investment opportunities as
these were ab initio free zones and "deemed foreign territories"
where investment was permitted unfettered by any controls. In
the Exim Policy 2002-07 as well as in the recent Budget, a comprehensive
policy package has been drawn up for attracting foreign investments
in SEZs involving fiscal concessions, export incentives etc.,
for both the SEZ developers as well as the SEZ units. "In fact,
we have been able to operationalise the concept of "deemed foreign
territories" by treating supplies from Domestic Tariff Area (DTA)
to the SEZ as physical exports. I look forward to a major Swiss
presence in this path breaking endeavour", the Minister said.
As part of the ongoing liberalisation
on the FDI regime, more sectors were now open to the automatic
route, requiring only intimating to the Reserve Bank of India,
while in cases not covered under the automatic route, the Foreign
Investment Promotion Board (FIP)B ensured speedy clearances of
applications received in about 30 days. Further, the Foreign Investment
Implementation Authority (FIIA) had been created as a post-investment
service mechanism and is functioning as an effective institutional
instrument of one-stop after care service
to foreign investors by sorting out their operational problems
and maximising opportunities through a partnership approach with
all stakeholders all the time. Recalling his meeting with Swiss
investors on the eve of his visit where issues of delay in getting
approvals, infrastructural inadequacies etc., were raised, Shri
Maran informed that a Committee had been constituted to suggest
simplification of procedures and reduction in the number of approvals
required for projects, especially FDI projects and said that the
report of this Committee would be available very shortly for follow
up. He stressed the scope for Swiss investment and collaborations
in the areas of information technology and knowledge-based industries
as well as in the infrastructure sector. India would also welcome
Swiss investment in food processing, banking & financial services
including insurance, tourism, pharmaceuticals & chemicals
and services sector, he said
