The Hindu : Govt. to review FIPB role

Online edition of India's National Newspaper
Wednesday, Jul 17, 2002

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Govt. to review FIPB role

By Our Special Correspondent

Armymen patrolling the Qasim Nagar area in Jammu, the scene of Saturday's massacre, on Tuesday. — Reuters

NEW DELHI JULY 16 . The Government today said it would review the role of the Foreign Investment Promotion Board (FIPB) and take steps required to enhance inflow of FDI.

Replying to supplementaries in the Rajya Sabha, the Finance Minister, Jaswant Singh, said the share of FDI in gross domestic investment in the country had risen from 0.12 per cent in 1990-91 to 2.13 per cent in 2000-01.

He said the FDI had contributed to economic growth by supplementing domestic investment providing technology upgradation, adding to improvement of managerial and technical skills and a widening of the marketing network.

The Government, he said, had taken several steps to promote domestic and foreign investment which, among others include liberalisation of policies in trade, industry, infrastructure, financial sectors, rationalisation and reduction of both direct and indirect taxes, reduction of interest rates, tax holidays for

investment in infrastructure and backward areas, combined with sound macro-economic policies so as to stimulate economic growth with stability in price and exchange rates.

However, the Finance Minister said the current inflow of about $4 billion was not satisfactory. He said India could easily absorb the $10 billion inflow of FDI which would help in employment, export promotion and overall growth of economy. He said the challenge was not about deregulation but de-bureaucratisation.

In reply to a question from Ambika Soni of the Congress, the Minister said China was getting greater FDI due to committed investments from people of Chinese origin in Taiwan, Singapore and other countries.

The Government also assured the House that it was `awake' to any aspect of illegality with regard to the Mauritius route in FDI while rejecting the demand of the CPI(M)'s Nilotpal Basu's for a comprehensive probe into the misuse of the Indo-Mauritius double taxation treaty by Indian business houses.

Mr. Jaswant Singh said it would not be proper for him to comment on internal legislation of a friendly neighbouring country. Mr. Basu had charged that business houses in India were misusing the treaty to get benefits on their investments. He said many houses were taking recourse to the Hawala for moving money out and bring it back through the Mauritius route to secure tax breaks.

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