Round The World
New Delhi, 25 February 2015
FDI Assurances
TEST FOR MODI DIPLOMACY
By Ashok B
Sharma
India with its quest for
attracting greater foreign direct investments (FDIs) has stepped up its
diplomatic efforts around the world. These have gained a renewed vigour after
the country relaxed FDI norms and shortlisted as many as 25 sectors to attract
investments under the ambitious ‘Make-in-India’ programme. These sectors are
namely auto components, automobiles, aviation, biotechnology, chemicals,
construction, defence manufacturing, electrical machinery, electronic system
design and manufacturing, food processing, IT &BPM, leather, media and
entertainment, mining, oil and gas, pharmaceuticals, ports, railways, roads and
highways, renewable energy, space, textiles, thermal power, tourism and
hospitality and wellness.
Total cumulative inflows of FDI
since the year 2000 to 2014, however, had not been encouraging. It stands at
only $355,415 million including equity inflows, re-invested earnings and other
capital. Therefore, the new government that came to power under the leadership
of Prime Minister Narendra Modi in May last year has become bullish in
attracting FDIs and has opened by as many as 25 sectors of the economy to
foster growth. The government feels that in the current period of continuing
global slowdown, India
with a market size of 1.2 billion people can be the most suitable destination
for global investors.
At a recent meeting of Heads of
Indian Missions Abroad, Prime Minister Modi urged to step up diplomatic efforts
aiming at garnering FDIs, augmenting country’s trade opportunity and meeting
energy needs. The President’s address to the joint session of Parliament just
before the Union Budget has revealed government’s intention to deepen
engagements almost everywhere across the globe, including West Asia, Central
Asia, Africa and South Americas.
Government’s ambitious projects like
Bullet Train, Digital India, Skill India, Housing for All, Swachh Bharat
Mission, Namai Gange, Smart Cities, Heritage Development and Augmentation
Yojana to name a few would need investments by prospective overseas investors
including Indian diaspora. Investments are also needed in infrastructure
sectors like industrial corridors, railways, roads and highways, freight
corridors, information technology highways. Energy sector, particularly clean energy
sector has been earmarked as a priority area for attracting foreign investment
and technology transfer.
Developing closer integration of South Asia is an integral part of Modi diplomacy. With
the agreement on energy cooperation approved in the last SAARC Summit at Kathmandu, the government has planned setting up of solar
energy generating capacities along the international borders. The idea of a
dedicated satellite for SAARC region is another area of proposed cooperation
with South Asian countries. The most vital and effective economic integration
in South Asia can, however, be possible with
the setting up of value chains across the region. For instance, Bangladesh that does not grow cotton but sources
from India
and exports readymade garments can through distributed value chains encourage
competitive advantages in production of both raw materials and value-added
products.
With prospects of Indian cricket
team brightening up at the World Cup, India has embarked upon cricket
diplomacy in the region. The Indian Foreign Secretary Subrahmanyam Jaishankar
has planned “SAARC Yatra” and would visit all the countries in the region. Some
analysts believe that stalled dialogue between India
and Pakistan is likely to
revive after a popular government is put in place in Jammu and Kashmir. India’s cricket diplomacy with Pakistan is
likely to encourage people-to-people contact before the dialogue process
resumes.
The President’s address mentions the
need for deepening cooperation with Europe. As
Europe is currently undergoing recession in its economy, the prospective
investors from that continent would look for investing in India if
adequate environment is created. Though India
has come closer to US in many ways and the latter has agreed to invest in the
former’s nuclear power project, New Delhi is
cautious about restoring confidence and momentum in its time-tested strategic
partnership with Russia.
Both the US and Russia have
assured co-production and development in defence sector.
India is particular in developing
its shipping sector also. Under Make-in-India programme it has planned to
strengthen ship designing capabilities, ship building and ship repair
activities.
India has taken up with sincerity
about its relationship with ASEAN and East Asia Summit and has changed its
policy to ‘Act East Policy’ The Chinese President Xi Jingping on his recent
visit to India had pledged to invest $20 billion in industrial and
infrastructure projects in India within a span of five years and $10 billion to
other countries in South Asia. But Japan had promised more – an
investment of $35 billion for building smart cities and next generation
infrastructure with the same period. In addition, Japan
has pledged ODA loan of 50 billion yen to India Infrastructure Finance Company
Ltd for a public-private partnership infrastructure projects in India. Australia has agreed to sell uranium for India’s nuclear
power projects.
President’s address says about the
need for deeper engagements with West Asia, Central Asia and South
Americas. West still remains a troubled spot, but is a necessary
destination for sourcing India’s
energy needs and also Sovereign Funds for investment in the country. Central
Asia is an energy rich region and India needs to strengthen its
relations with the countries in the region.
Turkmenistan-Afghanistan-Pakistan-India (TAPI) gas pipeline is in the process
of becoming a reality. India’s
proposed route through Chabahar port in Iran
to Afghanistan, Central Asia
and beyond to Europe should be taken up with
urgency.
Africa is a continent of strategic
importance to India.
The third India-Africa Forum Summit meeting that is slated to take place in
this year is expected to take the relationship to a higher level.
Similarly, if the relationship with the Community of Latin American and
Caribbean States (CELAC) is raised to summit level talks, India can get a
firm foothold in the region. Some of the African and Latin American countries
are energy rich and can meet India’s
energy needs.
New Delhi’s ambition to strengthen its
relationship across the globe can result in better trade relationships and
two-way investment opportunities. Prime Minister Modi has so far met over
40 world leaders, including those at the margins of major multilateral events.
He has directly appealed to the Indian diaspora and corporate houses in
countries he visited for investing in India. He has received assurances
from many world leaders and global corporate houses. It is to be seen how the
commitments translate into actual investments on the ground.---INFA
(Copyright, India
News and Feature Alliance)
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