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Saturday, Nov 23, 2002

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Govt to relax FDI rules

Our Bureau

NEW DELHI, Nov. 22

THE Government will shortly ease rules and streamline procedures for foreign direct investment (FDI), the Finance Minister, Mr Jaswant Singh, said here.

"One of the principal impediments to free flow of FDI is the turbidity of systems. The Government was committed to streamline them," Mr Singh said at a joint press briefing after the Cabinet level meeting of the Indo US Economic and Financial forum.

FDI flows have been looking up during the last three or four months.

Earlier in the day, the US Treasury Secretary, Mr Paul H. O'Neill, had mentioned the merits of opening up sectors such as telecom to foreign investors. "When the Government of India opened the door to foreign investment in automotive manufacturing and relaxed licensing norms for car makers, employment in the industry grew by 11 per cent and the overall productivity rose by 256 per cent from 1992 to 1999. Similarly, when India lifted regulations on the cell-phone industry demand rose and prices fell," Mr O'Neill said.

The Finance Minister also indicated that the Government would be able to achieve the targeted GDP growth of eight per cent in the next five years. The growth rate of eight per cent is achievable despite adverse factors such as unprecedented drought, tensions with neighbouring Pakistan, poor global economic recovery and the uncertainty in the Gulf region on the hydrocarbons front, he added.

Despite these conditions, industrial production and exports have staged a recovery and the current account had shown a surplus. Viewed against this backdrop, a 5.5 to six per cent GDP growth is still feasible in the current year, despite a poor kharif, Mr Singh said.

According to him, the process of reforms has only one direction which is moving forward. Every additional step will generate synergies.

Mr O'Neill said that the US Government would provide technical assistance and share ideas about various organisations to help India combat the offence of money laundering and terror financing.

Detailed talks were held on ways to strengthen financial markets to promote growth with special emphasis on enhancing private access to capital to support private sector development and accelerating reforms in the banking and financial sector. The US delegation was led in the talks by Mr Neill while the meeting was chaired on the Indian side by the Finance Minister. The RBI Governor, Dr Bimal Jalan, also participated in the talks.

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