New Zealand investors do not appear to evince interest in Foreign Direct Investment
(FDI) into India, a top official of the Indian Government has said.
Finance Secretary Ashok Chawla said institutional and individual investors from many parts of the world consider India as a profitable destination for investment.
Among the countries listed as ‘Top Investors’ in India are France, Germany, Japan, Malaysia, Mauritius, Netherlands, Singapore, Sweden, Switzerland, UK and US.
Mr Chawla said rules, regulations and procedures relating to FDI have not only been simplified but also relaxed to facilitate international investors.
“There are no roadblocks to invest or repatriate capital and revenue earned on investment. India is an investor-friendly country,” he said, speaking to the media in Auckland on September 17.
A Department of Industrial Policy and Promotion Report said India attracted FDI equity inflows of $US 2.21 billion in April 2010. The cumulative amount of FDI equity inflows from August 1991 to April 2010 stood at $US 134.64 billion.
The services sector comprising financial and non-financial services attracted 21% of the total FDI equity inflow into India, with FDI worth $US 4.4 billion during April-March 2009-2010, while construction activities including roadways and highways attracted the second largest amount of FDI ($US 2.9 billion) during the same period.
Real Estate was the third highest sector attracting $US 2.8 billion, followed by Telecommunications ($US 2.5 billion), Power ($US1.4 billion) and automobile industry ($US 1.2 billion).
According to the United Nations Conference on Trade and Development (UNCTD), India ranked third in Global FDI in 2009 and would continue to remain among the top five attractive destinations for international investors during 2010-2011.
Joint Ventures attract
Mr Chawla said New Zealand companies were keen on joint ventures.
“New Zealand has the leading edge in agriculture, agro-production and related industries. While investments are welcome on joint venture basis, these and a few other selected industries can be established as 100% foreign-owned entities. There are no more unnecessary procedures and delays,” he said.
Mr Chawla was in New Zealand as a part of an ongoing dialogue between the two Governments. He apprised officials of the Finance Ministry in Wellington and the private sector of New Delhi’s ‘Look East Policy’ and the robust investment climate in India.
“The start of negotiations for a Free Trade Agreement between India and New Zealand has also widened the scope for investments,” he said but agreed that the negotiations would be protracted and tough.
Mr Chawla said that India’s fiscal deficit was currently running at 6.2% of the Gross Domestic Product (GDP) and the challenge was to bring it down to levels that are more manageable during the next financial year.
“There is no single silver bullet that will solve the problem but we will continue with all the efforts,” he said.
In his budget speech to the Indian Parliament earlier in the year, Finance Minister Pranab Mukherjee had said that the Government aimed to reduce the deficit further to 4.8% of the GDP in the year beginning April 1, 2011 and to 4.1% of the GDP during the following year.
The planned reduction in the deficit comes at a time when domestic interest rates have been rising in response to the Government’s massive borrowings.
Mr Mukherjee has proposed that public spending would peak to about Rs 11.08 trillion (about $US 280 billion), accounting for a rise of 8% over the past year.
Government borrowing has been set at a whopping Rs 4.57 trillion ($US 100 billion), although almost all borrowings would be in the domestic market, through bills, bonds and redeemable debentures.
Mr Chawla said the tax rates in India were rational and that tax collection followed set procedures.
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Photo : Indian Finance Secretary Ashok Chawla (fourth from right) with Bank of Baroda (NZ) Limited Managing Director Satish Vermani (to his left), Branch Manager Ashok Bhadauria (sixth from right) and staff during his visit to the branch located on Dominion Road Mt Eden.
Indian Economy 2010-2011
A brief Action Plan
To revert to the high GDP growth path of 9%
Cross the ‘double digit growth barrier’
To harness economic growth and make development more inclusive
To address the weaknesses in government systems, structures and institutions
Review public spending, mobilise resources
Fiscal policy shaped as per 13th Finance Commission Report
Explicit reduction in Domestic Public Debt-GDP ratio