‘India can do more to attract foreign direct investment’January 24th, 2010 - 5:43 pm ICT by IANS
Chennai, Jan 24 (IANS) Urging further economic reforms by India to attract more foreign direct investment (FDI), speakers at the 16th edition of the Partnership Summit 2010 Sunday said the flow of investments into the country is far less than what it needs.
Deliberating on ‘Investment Security: Ensuring Capital Flows’, the speakers, however, agreed that India has made considerable progress in creating an investor-friendly climate since the early 1990s when liberalisation was ushered in.
The two day summit was organised by the Confederation of Indian Industry (CII).
Initiating the discussion, session chairman V. Srinivasan, a former CII president and WS Industries (I) Ltd chairman, called for a more stable macro-economic climate and better security structure in India.
He also stressed the need for further judicial and administrative reforms to draw greater investments into India.
Citing the increased flow of international capital into India, union Minister of State for Planning V. Narayanasamy said the striking feature of the capital flows to India in the recent period is that it is private (debt and equity) flows as opposed to official flows.
“The capital account has been dominated by flows in the form of FDI, portfolio investments, external commercial borrowings and non-resident deposits,” he said.
He said India’s approach to capital account liberalisation can be treated as a process and not an event, kept in tune with other reforms sequencing with other concomitant developments such as strengthening of banking, fiscal consolidation, market development and integration, trade liberalisation and the changing domestic and external economic environment.
While the government’s priority is to liberalise inflow, outflows associated with inflows have been totally freed, he added.
Citing global pension funds, insurance companies and mutual funds looking to raise their share of portfolios devoted to India, Narayanasamy said even two-tenths of one percent increase in their allocation of funds to India, the capital inflows will be high as the global institutional investment portfolio is estimated at $53 trillion.
Abdullah Ahmed Al Saleh, director general in the United Arab Emirates’ ministry of foreign trade, noted that Asia was moving into the centre of the new economic centre of the world, which comprised fast developing nations like India, China, Brazil and Mexico - all countries with large and robust domestic markets.
The key to success was partnerships between nations able to invest in new technology like the UAE and the skilled work force available in a country like India, he said.
Mauritius’ Foreign Affairs, Regional Integration and International Trade Minister Arvin Boolell said that while there was great need to support least developed countries (LDC) and developing country markets and give access to these countries, “we do not want Africa to make the same mistakes as countries like China”.
“If multilateralism is undermined in the Doha process (WTO negotiations), this will impact LDC and developing countries greatly,” he said.
According to Aircel Cellular Limited chairperson Suneeta Reddy, India was looking at $500 billion worth of investment opportunities but could lose as much as $150 billion in the industrial sector due to lack of adequate infrastructure.
Sharon Boomford, chief executive, UK-India Business Council, noted that British Indians were today returning to invest in India but cautioned that “we must not expect too much” from India yet, and not expect too rapid a change in the processes of its economy.
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Tags: 16th edition, administrative reforms, better security, confederation of indian industry, economic climate, economic reforms, external commercial borrowings, external economic environment, fiscal consolidation, foreign direct investment, investment security, partnership summit, portfolio investments, private debt, security structure, session chairman, striking feature, trade liberalisation, union minister, ws industries