INDIA’S FDI POLICY FRAMEWORK MOST LIBERAL, SAYS JAITLEY
Date : 25 Sep 2003
Location : New Delhi
Shri Arun Jaitley, Union Minister of Commerce & Industry and Law & Justice has said that India has one of the most liberal policy frameworks for foreign direct investment (FDI) and foreign technology transfer. Entry under automatic route only requires post-entry notification and no prior approval. FDI up to 100% is permitted on the automatic route in most sectors. There is no restriction on repatriation of original investment as well as returns on investment. Many new sectors have recently been opened to FDI, such as integrated townships (100%), insurance (26%), airports (100%), mass rapid transit systems (100%), etc. Foreign technology collaborations are also allowed on the automatic route within specified ceilings. Recently, companies who have entered into foreign technology collaboration agreements on the automatic approval route have been permitted (irrespective of the extent of foreign equity in the share holding) to make royalty payments @ 8% on exports and 5% on domestic sales without any restrictions on the duration of royalty payments. The Minister said this while speaking at an Investors’ Meeting in Hong Kong yesterday. "India’s foreign exchange reserves exceed US $ 85 billion, with accretion of US $ 20 billion last year alone. The balance of payments position has strengthened considerably. Exports have registered 19% growth during 2002-03, against a target of 12%. India’s share in service exports has double in the past ten years", he said.
On the overall policy front, Shri Jaitley highlighted several major initiatives that had been taken. These include " industrial delicensing, simplification of investment procedures, enactment of competition law, liberalisation of trade policy, full commitment to safeguarding intellectual property rights, financial sector reforms, liberalisation of exchange regulations, and above all a liberal, attractive, and investor-friendly regime for investment".
"The trade policy has also been greatly liberalized and most items have been placed on the open general licence system. The tariff levels have been brought down substantially (the present average tariff level is 25%) and are gradually moving towards the ASEAN levels. India’s trade policies are fully WTO compatible", Shri Jaitley said.
Shri Jaitley also said that Government of India had been attaching very high priority to the development of infrastructure. "The telecom sector in India is amongst the fastest growing in the world today. Similarly, a lot of progress is taking place in the roads and ports sector. The government has undertaken a US $ 12 billion project for development of national highways. The government has also announced the Special Economic Zone to attract private investment in industrial infrastructure. This scheme offers a lot of fiscal incentives and other incentives that are comparable to those offered elsewhere in the world", he said.