The Hindu Business Line : `More straight-forward, cost-effective policy vital to woo FDI'

LAST July, the United Progressive Alliance Government announced the setting up of an Investment Commission with a mandate to woo domestic and foreign investors, and named Mr Rata Tata as its head.

Though the commission is reported to have identified a few sectors to facilitate greater inflow of foreign direct investment through proper policy, it is not billed to be a one-stop place for securing the multiple approvals that foreign investors need to get their projects off the ground, over and above allied facilitations.

In contrast is the working of Think London, the official inward investment agency for London.

Set up a decade ago, Think London, working with the UK Government, the Mayor of London and private partners, goes the extra mile to help foreign investors set up shop — whether it is a European headquarters, business start-up or a logistics hub — and help its clients succeed and grow in London, a city that offers "limitless opportunities" by virtue of being the world's biggest financial and business centre.

Mr Michael Chartlon, CEO of the UK investment body, here on a weeklong trip to Delhi and Mumbai, told Business Line that "India's globalisation has been uniquely balanced with it being the only developing country among the top 10 nations, both for attracting FDI and making investments globally."

Over the last eight years, India's investment in Europe has seen an incredible rise of 450 per cent, he remarks, citing Ernst & Young's European Investment Monitor.

Pitching for India to open new areas for FDI, Mr Charlton did not agree that retailing would edge out domestic traders. There would be casualties in any business restructuring, but FDI in retailing creates a more competitive milieu with best business practices. Everything that surrounds retailing, such as marketing, branding, distribution and purchases, will provide new jobs to a whole range of service providers, he remarked.

The following is an excerpt from the interview:

On China's remarkable success in attracting FDI and India's relatively modest progress

Many foreign companies went to China at the time the market was opened up through joint ventures with local companies that eventually proved successful. In the current investment climate in China, FDI flows into areas with future profit, and foreign firms adopt different attitudes in dealing with Chinese authorities. I don't think the environment in China for FDI is going to go away as China is still the flavour of the moment.

India should also be the flavour of the season, given the huge population, functioning democracy and rule of law, which is more conducive to attracting foreign direct investment. But it has not taken an aggressive attitude about what investment opportunities are in the country. There is a great deal of evidence to show that more FDI has taken place in India, if not at the same level, as had happened in China, and foreign investors have shown profit more quickly and more successfully in India. It is important to capitalise on that and get the message out in the market place.

London is the largest recipient of FDI in Europe and it attracts a great deal more than the US rivals. The UK was the first country in Europe to deregulate the communications market and we have great deal of interests owned by domestic and international players.

On what is needed to attract FDI

The key to attracting FDI in any environment and in any country is not only having economic stability and rules that will allow growth and opportunity in a particular sector, but also providing infrastructure which attracts investors, besides a low-cost tax regime. More straightforward and cost-effective policy and packaging, as Think London does in the case of London, so that a level-playing field is maintained for both domestic and foreign players are the requirements.

Regulatory creep should be avoided. One of the competitive advantages of the UK in the European context is a very good taxation infrastructure. Too much regulation, too much restrictions by governments would make the business community lose confidence, and FDI tends to flow into economies where the business environment is stable.

On the Investment Commission in India.

This Commission, by the Government with business people running it, is an excellent step forward; at the end of the day business is what it does with business and not with the Government. We will be happy to interact with the Investment Commission and share our perception and experience so as to make this happen here.

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