Financial Daily from THE HINDU group of publications
Wednesday, Jul 03, 2002
Industry & Economy
Foreign Direct Investment
We can excel China in FDI, says Maran
The Minister for Commerce and Industry, Mr Murasoli Maran, launching the CII's WTO Web site along with the CII President, Mr Ashok Soota, at a national seminar on `WTO negotiations on trade in services' in the Capital on Tuesday.
NEW DELHI, July 2
THE Union Commerce & Industry Minister, Mr Murasoli Maran, today exuded optimism that India would strive hard to equal China and if possible to exceed and excel it in terms of attracting foreign direct investment (FDI) in the coming years.
Talking to Business Line here informally, Mr Maran cited the latest study by the private sector lending window of the World Bank, International Finance Corporation (IFC), which had said that there was not much difference between China's FDI and India's. This is "very encouraging'', he said, adding that "we are adopting a different yardstick. We are measuring the net inflow, whereas IMF standards are different''.
That is why, he said, "We have formed a small informal committee to go into the issue of adopting the IMF standard. If that is adopted, our FDI will be much higher, perhaps equal to China."
Stating that there were some difficulties in the extant method of FDI measurement by India, he said that if the profits were not repatriated but retained, it is also considered FDI by the IMF. "We do not know whether the RBI has any mechanism to measure the retained profits and so in consultation with the RBI, we are going into all the factors'' so as to arrive at the new standards, he said. And that it appeared last year the FDI flow into India was "historically high at $4.8 billion and we must watch how this year is going to be".
Asked about the fear that 100 per cent FDI in tea plantation would lead to misuse of tea estates, he said that is why ``we have made it clear they cannot, without the State Government consent, change the land use. This clause was there in the 1973 previous FERA and it is only a status quo ante''. Defending the 100 per cent FDI in tea plantation, the Minister said it was much needed now because "if FDI comes in, they will take care of the much-needed marketing and latest machinery. So it will help the tea growers and the industry in achieving higher productivity levels".
To a specific query about the 10.5 per cent export growth in the initial two months of the current fiscal, Mr Maran said that it very much falls in line with the targeted average growth rate of 12 per cent. "Export consciousness has come into effect and for the first time State Governments are participating in this endeavour," he noted.
He said, "We are very much optimistic but everything depends on the global economic revival and, in particular the revival of the US economy." He said that despite the slowdown in the US, India was one of the countries which increased its exports to the US, which is "a creditworthy'' feat.
The Minister said that exports by 15 of the top 25 exporting countries to US grew in April 2002 over the corresponding month of 2001 with the best performance being that of India at 27.3 per cent, followed by China at 18.4 per cent, Sweden at 9.8 per cent and Malaysia at 9.4 per cent. India's exports of diamonds and gold jewellery grew by 48 per cent in April 2002, marking the sixth successive month of growth of exports in this sector. This was bolstered by higher export growth of iron and steel and pharmaceuticals to the US market.
On the latest bout of unilateral measures by the US on steel and farm products, Mr Maran said: "Such unilateral measures are not good to multilateral trading system. Of course, big elephants are fighting among themselves. Let us wait and see. They should not preach others without adopting the same for them. US is the guarantor and protector of the WTO and as a leader they should show other countries the right way," he added.
In reply to another query on the firming up of prices of natural rubber in the global market, Mr Maran said, "We have got an export order of 20,000 tonnes of export by Goodyear out of which 7,000 tonnes had already been shipped. We have got an arrangement with Goodyear to train our people in changing the technique of rubber production. Now we are producing only sheet rubber. But they want it in a block form. Our farmers would be trained in producing rubber in block form as international market demand is only for such products. Thus, we are opening up avenues for our exporters".
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