fiogf49gjkf0d
The Editor,
BCAJ,
Mumbai – 400 020.
17th July, 2013
Dear Sir,
Re: FDI Reforms
Faced with harsh economic environment, both domestic as well as global, the Dollar starved Government has ushered in FDI Reforms. It has increased FDI Limits in 12 sectors (excluding Civil Aviation, Multi Brand Retail and News Media). In several sectors, 49% limit has been changed to Automatic Route from the FIPB Route. The decision was taken by 11 Key Ministers by consensus. Same day it was reported that Posco of South Korea has junked its $5.3 billion Karnataka Steel Project because of inordinate delay in getting iron ore mining rights. Other FDI Projects in Steel Sector proposed in last 10 years by Arcelor Mittal and others have not yet seen fructification due to delays in Land Allotment and getting exclusive Coal and Iron Ore Mining rights.
Besides the Reforms at Policy Level, the FDI Regulations are such a maze of Press Notes, Circulars, Notifications, Clarifications etc. that leave aside a foreigner, even the Regulators and Expert Consultants cannot find their way through . At times, the RBI does not implement the policy level changes made by the Finance Ministry, Commerce Ministry and DIPP.. Therefore, there is an urgent need to cut thru the clutter of such Press Notes, Circulars and Notifications and ensure that all the concerned ministries and their Officials and RBI are on the same page.
Further, the Reform Mindset has to percolate down to the State Government and the Municipal Authorities Today, it is seen that the Local Bureaucrats and Politicians, whether high or low, are not concerned with development of the State or the Country; their only concern is how do they get their pound of the flesh. They look for opportunities to milk the Businessmen and Industrialists, who are, therefore, looking for greener pastures abroad.
The decision to open up some sectors of the economy to greater foreign investment is a step in the right direction, coming as it does at a time when the country needs such investment to plug a yawning current account deficit. But the idea will not work if the government imposes unreasonable restrictions which put off investors.. While ensuring that loopholes are not exploited, the effort must be to make implementation of rules investor-friendly. The rules themselves must be fair and transparent. Only then will the benefits flow. If Governments, both at the Central and at the States, do not take care of the above, the policy relaxations will remain on paper and would not result in inflow of Foreign Exchange as earnestly hoped by the Union Cabinet and such hope will only remain a “Maya” (illusion).
Yours sincerely,
Tarun Singhal
