No conflict of interest in pushing FDI while promoting ‘Atmanirbhar Bharat’: CEA

Our Bureau New Delhi | Updated on June 29, 2021

Multinationals should help create jobs, support MSMEs

There is no conflict of interest in enhancing Foreign Direct Investment (FDI) flow into the country while promoting the policy of ‘Atmanirbhar Bharat’ as it is self-reliance that India wants to achieve and not self-sufficiency, Chief Economic Adviser K Subramanian has said.

Multinationals must focus on creating jobs and helping MSMEs to grow in order to create a symbiotic relationship that would allow FDI to prosper, Subramanian said at a policy roundtable discussion on ‘Leveraging FDI Flows for Sustainable Recovery, World Investment Report 2021’, organised by the Institute for Studies in Industrial Development (ISID) on Tuesday.

“Atmanirbhar is self reliance. Do not make the mistake of thinking of it as self sufficient. There is a big difference. It is to ensure that capabilities in essential areas are developed.....In fact, FDI norms have been relaxed as part of the Atmanirbhar Bharat policy,” the CEA said, adding that in the last couple of years a number of FDI relaxations including in the insurance sector had taken place.

India received FDI worth $64 billion in 2020, the fifth largest recipient of inflows in the world, according to UNCTAD’s World Investment Report, 2021, circulated earlier this month.

Also read: States need to ramp up expenditure on healthcare, says CEA Subramanian

“In a country like India, with a large work force and young population, one key objective that multinationals must focus on is to ensure that capital and labour are complimenting each other,” Subramanian said.

Maintaining balance

Multinationals must keep a balance between being privately optimal and socially optimal. If they are not seen as displacing jobs, then, in a democratic policy, there will be a greater backing for reforms, he added.

MNCs should also support MSMEs, who are their suppliers and customers, to help them grow and achieve economies of scale so that they are able to compete better globally, Subramanian said. It will help them reduce costs and also ultimately benefit the multinationals, he added.

Large companies need to create a bigger pie so that there is more not only for them but for all stakeholders. “This vision is very important for MNCs to benefit in the long run,” Subramanian said.

Published on June 29, 2021

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