COMMERCE MINISTER'S ADDRESS AT "DESTINATION
INDIA" SEMINAR AT SWITZERLAND
Reference & Record
The following is
the full text of Shri Murasoli Maran, Union Commerce & Industry
Minister’s address at "Destination India" Seminar at Zurich, Switzerland
on 19th June, 2002:
"Mr. Widmer, Board
Member, Swiss-Indian Chamber of Commerce, Thomas Daum, Director,
Swissmem, Mr. Modi, Past President, FICCI, Mr. Niranjan Desai,
Indian Ambassador, Captains of Industry, Ladies & Gentlemen.
2. May I pay tribute
to the Swiss-Indian Chamber of Commerce and the Board Member Mr.
Widmer and FICCI for arranging the ‘Destination India Seminar’.
3. It is an opportunity
for me and my delegation to present before you the changing face
of resurgent India. It is an India which has emerged from a period
of inward-looking, closed economy, labelled as ‘Permit / License
/ Control Raj’ and entered an era of openness and sustained economic
growth.
4. We are late-comers
to economic reforms and started liberalisation only in 1991.
5. We have realized
in practice that openness is decisive for rapid growth; the more
open we are, the more integrated we will be in today’s world-network
of ideas, markets, technologies and management innovations. We
are no more the prisoners of the past. Greater FDI is critical
for our rapid growth. Rapid growth and faster industrialization
are, in turn, imperatives for poverty reduction.
6. We further realize
that we have moved from a world where the big eat the small to
a world where the fast eat the slow. Therefore, SPEED is
the key of the reform process.
7. When I meet investors,
some of the questions they ask are: To what extent have you restructured
your economy to increase the speed of Government’s approvals,
transactions, investment and production? How fast can one of your
citizens move an idea from the garage to the market?
8. We have, therefore,
designed a more welcoming environment for Foreign Direct Investment
and we are continuously improving and upgrading it to maximize
the flow and its contribution that would not only fill-up the
savings-investment gap, but also enhance the outward orientation
of the economy. Therefore, we are very pro-active at fostering,
channelling and complementing FDI.
9. In short, the
initial trepidation towards foreign direct investment is now a
thing of the past. As Mr. Pascal Lamy, European Union Trade Commissioner,
observed recently: "India has one of the most open and liberal
investment regimes anywhere".
10. Traditionally,
the principal economic determinants of the flow of FDI are the
size of the market, its growth, attractive costs including the
skill levels and adaptiveness of human resources together with
a vibrant domestic entrepreneurial sector and, in particular,
the capacity of local suppliers to provide world-standard inputs.
11. With pardonable
pride I may say that in all the above tests we excel any other
emerging economy.
12. With one billion
plus population we are the second largest reservoir of human resources.
The emergence of vibrant and vital middle class with discretionary
income to spend on improving its quality of life is a characteristic
of recent economic growth.
13. This is with
regard to the size of our market. With regard to its growth it
is hovering around 6% per annum over a decade. Analysts are predicting
that we could register a growth of 6 to 6.5 per cent during 2002-03.
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.
14. We are not satisfied
with this growth rate. Our Tenth Five Year Plan 2002-2007 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 macroeconomic 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.
15. Regarding skill
level, every year, India’s English language technical colleges
turn out more than 73,000 engineering graduates and about 5,000
Ph.Ds in science and technology who have ensured India’s place
in the New Economy. As one Chinese official puts it: "India has
become one of the world leaders in the technology of the 21st
century. Knowledge of English has given Indians an edge in IT".
16. And finally,
we offer varied investment opportunities spanning from low technology
to the most advanced technology. Further, the existence of a vibrant
domestic entrepreneurial sector, and in particular, the capacity
of local suppliers to provide world standard inputs, is worth
mentioning.
17. Except for a
small negative list, most sectors are now open for entry through
the automatic route. This, as many of you would know, only requires
intimation to our Central Bank, the Reserve Bank of India. In
cases, which are not covered under the automatic route, the Foreign
Investment Promotion Board ensures speedy clearance of proposals
received in about 30 days.
18. With a view to
keep in touch with the foreign investors and solve problems that
they may encounter, we have created an post-investment-service
mechanism in the name of Foreign Investment Implementation
Authority (FIIA). It has emerged as an effective institutional
instrument of one-strop after-care-service to foreign investors,
by helping them obtain necessary approvals, sort out their operational
problems, meet various Government agencies to find solutions to
their problems and maximizing opportunities through a partnership
approach with all stakeholders all the time.
19. One of the major
initiatives that we have launched recently to unleash new economic
activity and to open massive investment opportunities is the introduction
of Special Economic Zones (SEZs). These are patterned on the successful
zones in some other countries, tailored to India’s requirements
and would ‘ab initio’ be free zones and ‘deemed foreign territories’
– where investment would be permitted unfettered by any controls.
The setting up of SEZs is also likely to further boost our exports.
In the latest EXIM Policy for the period 2002-07, as well as the
recent Budget a comprehensive policy package has been drawn up
for attracting foreign investment in SEZs involving fiscal concessions,
export incentives etc. for both the SEZ developer as well as the
SEZ units. In fact, we have been able to operationalize 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.
20. As a prelude
to my visit here, I had convened a meeting with Swiss investors
who are already in India. The Ambassador of Switzerland in India
was also present at this meeting. I am very happy to inform you
that most of them are very happy doing business in India. During
the meeting with Swiss investors, important problems mentioned
related to multiplicity of agencies and delay in getting the required
approvals from a number of agencies, inadequacy of infrastructure,
etc. the problems regarding custom procedures and taxes were also
highlighted. I am happy to inform you that we have already initiated
action and a Committee has been constituted to suggest simplification
of procedures, reduction in the number of approvals required by
projects – especially FDI projects. The report of the Committee
will be available shortly for follow up.
21. Today, ours is
probably one of the most open and liberal investment regimes with
conductive FDI environment among the emerging economies.
22. That is why,
every year our FDI flow is increasing. Last year (in 2001-02)
FDI registered an impressive increase which is the highest so
far in the history of India - US $4.7 Billion by adopting our
own conservative computation. It happened despite the global recession
following September 11 terrorist attacks in the U.S. But, International
Finance Corporation (IFC), a World Bank arm, has said that the
difference in FDI as a percentage of GDP between China and India
is a mere 0.3 per cent. FDI accounts for two per cent of China’s
Gross Domestic Product while it accounts for 1.7 per cent of India’s
GDP. It is also revealed that as per the internal survey conducted
by IFC, business environment in India is better than in China.
We strive hard and do hope to close the gap and excel China. While
our FDI target is US$ 10 Billion per year some economists feel
that our economy can absorb more than US $20 Billion.
23. To do this we
need to engage with investors in general who are searching for
less costs, less risks and high returns. We are just doing that
on an ongoing basis. We will continue the process of liberalisation
and create still more conducive environment for FDI.
24. I would say with
confidence that your investments are safe, your patents are safe
and your rates of returns are high. According to the FDI Confidence
Audit conducted by AT Kearney in February 2001, the average expected
rate of return on investments in India for their audit sample
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 those safeties.
25. As the South
Asian hub for information technology and knowledge-based industries,
India also offers tremendous economic opportunities for investors.
Indian software industry today has become a brand name for India
all over the world. In IT and IT enabled services, Indian professionals
are emerging as world leaders. This sector today has the maximum
scope for productivity enhancement. Possibilities can be explored
for setting up mutually beneficial Joint Ventures between the
two countries in this field. Indian software and other knowledge-based
industry professionals may be provided more opportunities to work
in Switzerland.
26. Another thrust
area where we welcome Swiss investments is the infrastructure
sector. It is estimated that over the next five years, investment
requirements in only four infrastructure sectors of power telecom,
ports and road would be US $267 Billion. We would welcome Swiss
investment in food processing industries, banking and financial
services including insurance sector, information technology, tourism,
pharmaceuticals and chemicals, services sector, etc. in view of
our development priorities and potential.
27. I am of the firm
belief that Swiss investments in India will not only help our
country but will create massive spin-offs for Swiss industries
also. It is with this great deal of optimism and hope that our
deliberations should continue and fructify in due course. No investor
can ignore India either as a manufacturing base or as a market
or as a launching pad for exports. And India is not only a market
for today but increasingly so for the future.
Thank you".
