The Hindu Business Line : Govt will function as `gateway to investments'

HERE'S something for India Inc to look forward to and cheer about. As a measure to promote investments further in a liberalised environment, the Congress-led UPA coalition Government has taken a conscious decision to shed the "traditional" Governmental role of being "gatekeepers".

Instead, the various Ministries and Departments - and especially the Ministry of Finance - will function as "gateways" to facilitate larger investments, both domestic and foreign, and clear the roadblocks, if any, that still stand in the way.

"Instead of being gatekeepers - which is still largely the mindset despite all these years of liberalisation - the Government will henceforth function as a gateway to investments," sources in the Finance Ministry said. Although thesources did not like parallels to be drawn in this "new and innovative" approach as far as India is concerned, the process of facilitating investments is more on the lines of the MITI in Japan.

Henceforth, instead of the corporate honchos hobnobbing in the Ministry corridors to sort out hitches or irritants that stand in the way of their planned investments, the Government is going to approach the corporate conglomerates, large industrial houses as also core businesses, either individually or in sectoral groups, to find out about their investment plans in advance. For instance, be it the Tatas, the Ambanis, the Aditya Birla Group or Larsen & Toubro and Gujarat Ambuja, Government officials, as facilitators, are likely to plan group or individual meetings to find out about their investment plans over a nine-month to one-year horizon.

If investments are being firmed up, the officials would take pains to find out whether there are any problems that are standing in the way and thus affecting smooth project programming.

These problems, be they in the field of policy, environment or infrastructure, are then to be taken up at the various Governmental levels and ironed out to help the corporates in project planning and investments.

On the contrary, if it is found that certain corporates houses are wary of making investments, the reasons for such decisions are to be sought and efforts would be made to iron out the hitches to facilitate investments.

The exercise, say sources, would be the same for both private domestic and foreign investments.

They said that there is no reason why only about 130 of the Fortune 500 companies have some operations in India. "What about the remaining 370? Ways have to be found to make India attractive to them for investment and for this, there has to be a frank dialogue with them to find out what is keeping them away.

"Round-tripping and other issues apart, there's no reason why India should be able to attract just about a tenth of the foreign direct investment that China mops up each year."

Over the last few years, various bodies have been set up to promote investments.

The one such existing is the Foreign Investment Promotion Board (FIPB) to clear investment proposals while another body, called the Foreign Investment Implementation Authority (FIIA), was meant to facilitate and monitor the investment proposals approved.

Sources felt that while the FIPB may have outlived its utility, the FIIA has generally been a dormant body.

Sources pointed out that there was one silver lining. While the Government's efforts would be to take the investment curve further up - something that had been done by the previous regime - the mindset of the corporates have also changed. Earlier, they had sought sectoral incentives or protection, as in 1996. But now, they want only the climate to be provided to let them grow.

That's a marked difference, and hence the move for facilitating that environment, say sources.