FDI in India will continue, British investors told
The absence of any mention of FDI in the recent Indian budget does not mean the government is not serious about attracting foreign direct investment, Gauri Advani, a partner at Eversheds law firm, has told British bankers and investors.
Advani, who heads Eversheds’ India Business Group, told a well-attended meeting of investors at the law firm’s London headquarters Monday that FDIs will be sought and reforms rolled out through the term of the present government by individual ministers who have been clearly instructed to do so by Prime Minister Manmohan Singh.
“There are ministers and there are ministers,” she said in response to a query about the absence of the words FDI in Finance Minister Pranab Mukherjee’s July 6-budget speech.
“So (former finance minister P.) Chidambaram’s dream budget (of 1997) is something else, while a conservative minister like Pranab Mukherjee will use words possibly more conservatively because of his West Bengal background he’s just won an election, come into parliament,” she said.
“So whilst it wasn’t mentioned, clearly the message is that foreign direct investment is something the Indian government cannot move ahead without and something that each ministry is following very closely,” she said. The Indian budgest was presented July 6.
Ravi Kulkarni of Mumbai-based Khaitan and Co. said the experience of India shows that reforms are rolled out through the year at the initiative of individual ministers led by the prime minister and that in any case the vast majority of sectors had been opened to high-cap FDI.
“Except insurance, education, retail and defence, which have always been strategic, in all the other sectors there is 100 percent automatic FDI. In telecom, you can go up to 74 percent,” Kulkarni said.
He said Mukherjee would have been aware of coming elections in West Bengal and Tamil Nadu, where Trinamool leader Mamata Banerjee and Chief Ministe M. Karunanidhi have “already started making promises about divestment and FDI”.
“Pranab Mukherjee is an extremely astute politician and being a political animal, every word he speaks he measures it and sees its full impact.
“He’s not sitting in an ivory tower – he’s very much a hard-boiled politician. At the same the prime minister is leading him.
Sharon Bamford, chief executive of the UK India Business Council, ascribed the Bombay Stock Exchange’s reaction to the budget – the Sensex fell drastically – to an “expectation gap” over FDI, but added: “I don’t think it’s inextricably linked to the budget. It’s not going to stop because it wasn’t mentioned in the budget.”
