‘Indian economy strong, will continue to attract investments’

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April 30, 2012

Brushing aside the concerns over impact of the proposed changes tax laws, Commerce and Industry Minister Anand Sharma said Indian economy is strong and exuded confidence that foreign investments will continue to flow into the country.

April 30, 2012

Brushing aside the concerns over impact of the proposed changes tax laws, Commerce and Industry Minister Anand Sharma said Indian economy is strong and exuded confidence that foreign investments will continue to flow into the country.

"Investment and taxation are two separate issues", he said, when asked whether the introduction of General Anti Avoidance Rules (GAAR) will hurt foreign investments. "For FDI, we have a policy which is stable and progressive and there have been changes made in the recent past which have gone down well with investors", the Minister said.

Finance Minister Pranab Mukherjee in his Budget for 2012-13 has proposed to introduce GAAR to check tax evasion by overseas investors. The proposal evoked criticism from institutional investors which felt the move would hurt investment. Sharma, while recalling the initiatives taken by the government to attract FDI, said, "some of the initiatives which are under implementation are projects like Delhi Mumbai Industrial Corridor (DMIC) and National Manufacturing Investment Zones (NMIZs).

"These are seriously engaging the interest of our foreign partners and we are hopeful that major developed countries, which are our economic partners, will be investing both in technology and in establishment in partnership with Indian industry", he said. On impact of global crisis on the domestic economy, the Minister admitted that they would have some impact but the Indian economy was strong enough to withstand the problems.

"If we see our economy objectively, we are being affected by international crisis specially euro crisis and high oil prices. It affects specially exports and imports, thus, impacting the overall current account and trade account. But in actual sense, our economy is strong", the Minister said. With crude oil and gold alone accounting for over 44 percent of total import bill of USD 489 billion and exports losing steam mid-way, India ended the fiscal 2011-12 with the highest ever trade deficit of USD 185 billion causing a "serious" challenge for the economy.

During April-February 2011-12, Indian received FDI worth USD 28.40 billion against USD 18.3 billion in the same period previous fiscal. On reports of complaints by Indian traders regarding high cargo-handling charges at new Integrated Check Post (ICP) at Attari, Commerce Secretary Rahul Khullar said, "There have been reports to that effect… Some traders are complaining that charges are too much."

He, however said, the issue would be sorted out by the Department of Border Management, under the Ministry of Home Affairs, and they would decide what the rate should be.

To give impetus to people-to-people contact and trade ties with Pakistan, India opened a modern ICP earlier this month which is equipped with a dedicated passenger terminal and sprawling cargo facility, built at cost of Rs 150 crore. On FDI in civil aviation, Sharma said, "The matter has been discussed and the proposal has been mooted. Finance Minister Pranab Mukherjee, Civil Aviation Minister Ajit Singh and myself have discussed it and a view will be taken soon." The Commerce and Industry Ministry had moved a Cabinet note on allowing foreign carriers to pick up equity in their Indian airlines.

Before the proposal of allowing foreign airlines to buy stakes in domestic carriers is taken up by the Cabinet, Prime Minister Manmohan Singh is likely to consult senior ministers including new Railway Minister Mukul Roy, who is from Trinamool Congress, to build a consensus on the contentious issue. The Finance Minister in his Budget speech had said that a proposal to allow foreign airlines to participate with up to 49 percent in the equity of an air transport undertaking, engaged in operation of scheduled and non-scheduled air transport services, is under active consideration of the government.

At present, India allows foreign investors, not related in any way to airline business, to buy up to 49 percent stake in domestic airlines, but foreign carriers are not permitted to invest in them. Accepting a major demand of the cash-strapped aviation industry, the government had in January launched the process for allowing FDI by airlines in the sector.


Courtesy: economictimes