INDIA'S FDI POLICY FRAMEWORK MOST
LIBERAL, SAYS JAITLEY
Shri Arun Jaitley,
Union Minister of Commerce & Industry and Law & Justice
has said that India has one of the most liberal policy frameworks
for foreign direct investment (FDI) and foreign technology transfer.
Entry under automatic route only requires post-entry notification
and no prior approval. FDI up to 100% is permitted on the automatic
route in most sectors. There is no restriction on repatriation
of original investment as well as returns on investment. Many
new sectors have recently been opened to FDI, such as integrated
townships (100%), insurance (26%), airports (100%), mass rapid
transit systems (100%), etc. Foreign technology collaborations
are also allowed on the automatic route within specified ceilings.
Recently, companies who have entered into foreign technology collaboration
agreements on the automatic approval route have been permitted
(irrespective of the extent of foreign equity in the share holding)
to make royalty payments @ 8% on exports and 5% on domestic sales
without any restrictions on the duration of royalty payments.
The Minister said this while speaking at an Investors’ Meeting
in Hong Kong yesterday. "India’s foreign exchange reserves
exceed US $ 85 billion, with accretion of US $ 20 billion last
year alone. The balance of payments position has strengthened
considerably. Exports have registered 19% growth during 2002-03,
against a target of 12%. India’s share in service exports has
double in the past ten years", he said.
On the overall
policy front, Shri Jaitley highlighted several major initiatives
that had been taken. These include " industrial delicensing,
simplification of investment procedures, enactment of competition
law, liberalisation of trade policy, full commitment to safeguarding
intellectual property rights, financial sector reforms, liberalisation
of exchange regulations, and above all a liberal, attractive,
and investor-friendly regime for investment".
"The trade
policy has also been greatly liberalized and most items have been
placed on the open general licence system. The tariff levels have
been brought down substantially (the present average tariff level
is 25%) and are gradually moving towards the ASEAN levels. India’s
trade policies are fully WTO compatible", Shri Jaitley said.
Shri Jaitley
also said that Government of India had been attaching very high
priority to the development of infrastructure. "The telecom
sector in India is amongst the fastest growing in the world today.
Similarly, a lot of progress is taking place in the roads and
ports sector. The government has undertaken a US $ 12 billion
project for development of national highways. The government has
also announced the Special Economic Zone to attract private investment
in industrial infrastructure. This scheme offers a lot of fiscal
incentives and other incentives that are comparable to those offered
elsewhere in the world", he said.
