“The (Indian) government is taking steps to attract FDI by
simplifying policies and also considering easing FDI norms in sectors such as
multi-brand retail and defense among others,” said the country’s Commerce and
Industry Minister Anand Sharma while addressing a India-Korea business forum
along with Kim Jong-Hoon, South Korean minister for trade.
Separately, Planning Commission Deputy Chairman Montek Singh
Ahluwalia also backed opening up the multi-brand retail sector to FDI saying it
would benefit farmers and also help contain food inflation.
“The Planning Commission supports FDI in (multi-brand)
retail. Farmers will benefit from modern retail marketing. No doubt that modern
retail marketing is good,” Ahluwalia said at a program organized by news
channel CNBC-TV18.
India’s Commerce Ministry — which is responsible for making
FDI policy — recently floated a concept paper on permitting foreign investment
in the politically sensitive multi-brand retail sector.
At present, 51 percent FDI is permitted in single brand
retail, while 100 percent is allowed in the wholesale cash-and-carry segment.
Earlier, trying to allay fears about “mom-and-pop” stores
going out of business if the sector is opened up, Ahluwalia asserted that
large-scale multi-brand retail will be a difficult proposition in India because
land is not easily available in commercially viable locations.
“In the next five years, we are aiming to have $250 billion
worth of FDI coming into India,” Sharma said at the event organized by the
Confederation of Indian Industry in New Delhi.
The target of $250 billion seems quite ambitious in the wake
of India receiving cumulative FDI of $124 billion into equity in the last 10
years. This fiscal FDI inflows stood at $14 billion during April-November
2010-11, a decline of 27 percent over the same period last year.
Sharma said that during the global economic crisis, India
remained one of most attractive destination for foreign investors.
“We have an investor-friendly policy regime,” he added.
The Indian minister also said that the country is in the
process of establishing large investment regions called National Manufacturing
Investment Zones to attract investments in manufacturing.
On his part, Kim, the Korean trade minister, said that the
bilateral trade between India and Korea increased by more than 44 percent to
about $17 billion last year since the implementation of Comprehensive Economic
Partnership Agreement (CEPA).
Both Sharma and Kim said that the bilateral trade target of
$30 billion by 2014 is achievable, adding that the CEPA review is aimed at
deepening and further expanding bilateral economic ties between the two
countries.
However, Kim called for lowering of entry barriers for
Korean companies willing to invest in India to facilitate investment by Korean
companies.
More than 200 Korean companies, including Hyundai, LG and
Samsung, are already present in India and many other firms, such as Dusan Heavy
Industries and Hyundai Constructions, have shown interest in the Indian
infrastructure sector, Kim added.
