The Hindu Business Line : `Spurt in FDI vindication of India's economic reforms working well'

New Delhi May 23 India today told the WTO that its economic and trade policy initiatives and reforms have been working well as could be seen from the upsurge in FDI in the last three years, with flow rising from $2.2 billion in 2002-03 to $16 billion in 2006-67.

At the three-day WTO Trade Policy Review of India in Geneva, the Commerce Secretary, Mr Gopal K. Pillai, in his opening statement, said that the staggering increase of 725 per cent could be even more if, in line with global practices, reinvested retained earnings are included, in which case the figure touches $19 billion, constituting 2.3 per cent of the GDP.

This is a quantum jump from barely 0.5 per cent of GDP three years ago.

Mr Pillai also said that the targeted FDI equity flow this fiscal is $25 billion, adding that the manifold spurt in FDI is "a strong vindication of the effectiveness of the policies followed by India."

According to him, India continues to unilaterally reduce its tariffs and barriers to foreign trade.

Citing the WTO Secretariat's admission that the overall applied MFN rate of India fell from 32.4 per cent in 2001-02 to 15.8 per cent in 2006-07, Mr Pillai said that it was not just the lowering of tariffs but the very fact that India's imports and exports have been growing every year in the last four years shows that it is an open economy.

"We are of the view that continued and sustained growth of the Indian economy is not only good for India but also for the rest of the world. We also believe that in a more integrated global economy, it is necessary that other less developed countries also grow so that they are able to get the benefits of globalisation.

"For sustained economic growth, there is need for continual reform as well as a matrix of institutions and public policies tailored to the new needs of the economy."

He added that a slew of policy reforms have been implemented over the last decade, as brought in the WTO trade policy report.

Referring to non-tariff barriers (NTBs) to imports from developing countries, he said that NTBs in the form of restrictive regulations were obstacles that markedly affected not only exports but also the capacity to trade.

As a result, even after more than two decades of rapid trade growth, the pattern of trade remained highly skewed in favour the developed world.

"High-income countries representing 15 per cent of the world's population still account for two-thirds of world exports.

"The share of world exports of sub-Saharan Africa, with 689 million, is less than one-half of that of Belgium with 10 million people."

He added: "There is now a historic opportunity to partially correct this imbalance in the current Doha Development round."

The statement said that India is extremely concerned at the slow pace of negotiations.

"While the suspended talks have resumed, the political will on the part of developed countries is still not evident.

"Unless the development dimension of the Doha Round is met and the developing countries prosper, global trade will always be at risk.

"The rapid economic growth of developing countries is a must for a truly global trade order to flourish. India stands committed to meeting its obligations under the mandate of the July Framework and the Hong Kong Ministerial declaration.

Developed countries musts recognise that our destinies are intertwined."

The statement recounted the various policy initiatives India had taken since the last policy review by WTO in 2003.

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