India is one of the most liberal countries in terms of FDI: Amitabh Kant

According to Mr. Amitabh Kant, Secretary, Department of Industrial Policy and Promotion, Ministry of Commerce and Industry, Government of India, India is one of the most liberal countries in terms of its FDI regime as over 90% of the proposals fall under the automatic route. Mr. Kant was addressing a session on “Make in India: Offering a New Partnership Opportunity to Industry” at The Partnership Summit 2015 organised by the Confederation of Indian Industry (CII), the Department of Industrial Policy and Promotion (DIPP) and the Government of Rajasthan in Jaipur during 15-17 January 2015.

(L-R) Dr Surinder Kapur, Chairman, Sona Koyo Steering Systems Ltd & member of the Apex Committee on CSM; Mr Amitabh Kant, Secretary, DIPP, Ministry of Commerce and Industry, Government of India; Ms Nirmala Sitharaman, Minister of State (Independent Charge) for Commerce and Industry, Government of India; and Prof Shoji Shiba, Chief Advisor, Champions for Societal Manufacturing at the Partnership Summit, CII, Birla Auditorium, Jaipur on 15 January, 2015.

According to Mr. Kant, job creation is a major challenge in India given its demographics. He pointed out that growth in India was largely driven by the services sector and India and not through manufacturing. He felt that India now needed to adopt a policy of manufacturing led growth in order to create the quantum of jobs required for India’s growth.

He pointed out that one of the key features of the Make in India campaign was to make India an easier place to do business.  It is in this context that several laws, rules and regulations had been simplified. The use of technology was being promoted to make compliance easier. The new e-biz platform, he pointed out, was created for just that purpose.

Mr. Kant highlighted that as a part of this initiative the FDI regime had been liberalized and FDI restrictions on several sectors such as railways, defense and construction had been relaxed.

According to Mr. Kant, another major feature of the Make in India campaign is the focus on infrastructure development. In this context, Mr. Kant spoke about the Delhi Mumbai Industrial Corridor and pointed out that by 2017, it is expected that goods from Delhi would be able to reach Mumbai and loaded onto ships in a matter of 14 hours instead of 14 days at present. Similarly, several other corridors being developed in different parts of India should help link industrial centers inland to ports.

In his address, Mr, Martin Hamilton-Smith, Minister for Investment and Trade, Government of South Australia stated that his state was ready to support the Make in India campaign. He stated that South Australia was a major center for high value added manufacturing such as robotics and industrial automation which could help make manufacturing processes more efficient.

Mr. William Danvers, Deputy Secretary General, Organisation for Economic Cooperation and Development (OECD) and Mr. Li Yong, Director General, United Nations Industrial Development Organisation (UNIDO) both highlighted the need for India to address issues such as infrastructure and regulatory bottlenecks so as to attract greater investment into the manufacturing sector. These, they stated, included reforms in areas such as labour regulations, land acquisition, tax policies among others.

In her address, Ms. Patricia Hewitt, Chair, UK-India Business Council stated that UK companies are already manufacturing in India – some for several years now. She pointed out that UK was the largest G-20 investor in India if one were to consider portfolio investment and FDI together. India, in turn, was one of the largest investors in the UK and Tata Steel had emerged as the country’s largest employer. Ms. Hewitt stated that the UK could extend support to India in areas such as smart cities, re-juvenation of older cities, embedded services in manufacturing among others.

Government is moving rapidly with proactive policy making to regain overseas investors’ confidence: Arun Jaitley

Delivering the inaugural address at the “Invest in India summit 2015” in Gandhinagar, Shri Arun Jaitley, Minister of Finance, Corporate Affairs and Information & Broadcasting said “At a time when we all have gathered here to discuss how to ensure finance for the future growth, introspection of why investors stopped investing in India can be of great help. Delay in decision making and aggressive tax regime are some of the factors, which has restricted the flow. But now, with some policy initiatives like FDI in sectors such as insurance & defense, the Central Government is trying hard to regain the confidence of the foreign investors. We are committed to ensure ease of doing business. Further, core focus on rural segment, infrastructure and smart cities is also expected to give a fillip to the investment.”

The summit was organized by Union Ministry of Finance & Finance Department, Government of Gujarat in association with Confederation of Indian Industry (CII) and GIFT. Discussion during the summit, held today at Mahatma Mandir, Gandhinagar as a part of ongoing Vibrant Gujarat Investors’ Summit, revolved around its theme of “Financing for Future Growth”. Twelve memorandums of understanding (MoUs) were also signed during the summit between private companies / organizations & various departments of Government of Gujarat in the presence of Shri Jaitley, and Smt. Anandiben Patel, Honorable Chief Minister of Gujarat.

Image Courtsey:economictimes.com

Earlier, in his opening remarks, Shri Saurabhbhai Patel, Finance Minister, Government of Gujarat, said “With proactive industrial & IT policy, Gujarat has provided a conducive environment which can facilitate realization of Honorable Prime Minister’s vision of “Make in India”. Further, the state has also identified some labor intensive sectors and special incentives are being offered in order to ensure capital inflow to these sectors.”

Delivering special address at the inaugural session, Dr. Arvind Subramanian, Chief Economic Advisor, Ministry of Finance, Government of India, said “Unlike 1980s & 90s, voters now give decisive political mandate for decisive economic change. In such a scenario, reforms by Center combined with competitive federalism are now two potent streams for the positive change required for funding the future growth. At the same time, participation of private sector and competition between the states for fetching investment are also good sign for the growth process.”

Giving details of India’s funding requirement and potential options for the same, Dr. Hasmukh Adhia, Secretary, Department of Financial Services, Ministry of Finance, Government of India, said that if we want to maintain a GDP growth rate of 7% per annum, financing of various sectors needs to grow at an annual rate of 18%. In other words, it requires investment flow of US $ 800 billion i.e. Rs. 50 lakh crore per annum. To ensure this much amount of capital, we need to focus more on domestic fundings. Corporate debt market can be a good option for this purpose. Similarly, we also need to increase saving to GDP ratio, Dr Adhia stated.

CII Welcomes Cabinet Approval of 100 % FDI for Medical Devices Under Automatic Route

Mr. Chandrajit Banerjee, Director General, CII welcomed the Cabinet approval of 100 % FDI for Medical Devices under the “automatic route”. He mentioned that this would  meet a very long standing need for local manufacturing and technology infusion in the sector which continued  to meet the growing healthcare needs of a vast country like India largely through imports. It clearly distinguishes the Medical Devices sector which is primarily greenfield so far, from the Pharmaceutical sector which was brown field and needed several protections.  He expressed hope that this step will go a long way in making the  “Make in India” programme happen for this sector as the  Govt. was expected to  continue to emit similarly positive signals to make the country an attractive for investors to make, market and export their products.

Welcoming the move, Mr Pavan Choudary, Chairman, Medical Technology Division of the CII and Managing Director, Vygon India Pvt Ltd, said “Since the time medical devices were classified as “Drugs” getting Foreign Direct Investment in this sector became a challenge.  The figures as released by DIPP indicated that in the period April 2000 to June 2012, when Drugs and Pharmaceuticals witnessed FDI inflows of US$ 9659 million, Medical and Surgical appliance had FDI inflows of US$ 523 million only. The main reason for this scant FDI was that medical devices (as Drugs) had to go through the tedious FIPB route which was a time, effort and resource consuming affair. With the FDI now being allowed on an automatic route, the CII Medical Technolgy Divison was looking forwad to a  surge of  interest in this area provided the market space stayed attractive enough for investment from MNCs through consistent policies on export, pricing and the manufacturing front.

Mr Himanshu Baid, Co-Chairman Medical Technology Division of the CII and Managing Director, Polymedicure Ltd said that this  sector,  to develop, needed  strong infusion of international technology and required  long gestation periods and deep pockets. This nascent, green field sector of Medical Devices by being clubbed with the Drugs and Pharmaceutical sector languished and accounted in India for as little as $ 2.5 billion (including Exports). This was only 1% of the World Market (the world Market being $ 250 billion) as compared to the Indian Drugs and Pharmaceuticals sector which stood at $ 20 billion (including exports) accounting for 7% of the World Pharmaceutical market of $ 300 billion.

“India and United States need to find creative solutions to issues impeding India US Trade Relations” Ambassador Michael Froman, USTR

At a closed door round table with a senior industry group from the Confederation of Indian Industry, US Trade Representative, Ambassador Michael Froman highlighted issues relating to Intellectual Property Rights protection, local sourcing norms, regulatory challenges and mobility of high skilled labor. He stressed on the high standards for IPR being adopted by the Trans Pacific Partnership (TPP) negotiations and suggested that as an innovative economy, India needs to look at IPR norms more closely. At the same time, he suggested that collaborative and creative solutions need to be explored by both countries to address and resolve issues where this is no agreement. Ms Kathleen Stephens, US Ambassador to India, also participated in the meeting.

Ambassador Froman further spoke of US President Obama’s recent executive order on immigration which will benefit H1B workers and their spouses, many of whom are from India. He expressed hope that the President’s action will help ease concerns of Indian companies with regard to challenges in high skill labor mobility with the US.

On the Indian side, the interaction was led Mr Ajay S Shriram, President, CII; Mr Sumit Mazumder, President Designate, CII; and Mr Chandrajit Banerjee, Director General, CII.

Senior representatives from Indian companies spanning diverse sectors such as pharmaceuticals, technology, financial services, engineering and automotive sectors raised some of the major issues and challenges faced by Indian companies in doing business with and in the US. Specific issues raised included the lapsing of Generalized System of Preferences (GSP) by the US Congress which is having a detrimental impact on Indian SMEs; the challenges faced by Indian generic pharmaceutical companies with regard to the USFDA; the upcoming BASEL III norms on bank capital adequacy which will negatively impact financing for trade by SMEs and onerous restrictions on SMEs imposed by the North Atlantic Free Trade Agreement (NAFTA).

Referring to FDI caps on various sectors, Mr.Ajay Shriram, President CII said “the Government of India is committed to opening up the Indian economy—we have already seen this with the defense sector and expect the trend to continue in other areas also”.

Mr Chandrajit Banerjee, Director General, CII further expressed satisfaction on the resolution of the impasse at WTO and said “CII is extremely pleased that India and the United States have come to an understanding with regard to Trade Facilitation and Food Security.”