Financial Daily from THE HINDU group of publications
Friday, Jan 27, 2006
Foreign Direct Investment
Industry & Economy - Events
Govt targeting $10-b FDI in '06-07: Kamal Nath
Davos , Jan. 26
THE Government is targeting an overall foreign direct investment (FDI) inflow of $10 billion during the next fiscal and expects around $7.5 billion in the current financial year, the Minister for Commerce and Industry, Mr Kamal Nath,said on Thursday. He was speaking to the Indian media here.
The actual FDI inflow till October this fiscal stood $2.59 billion. Elaborating on the new FDI policy that was announced on Tuesday, he said it was solely for the purpose of employment generation.
More jobs in the offing
There will be no employment displacement or replacement, but there would be creation of 100,000 jobs. It would essentially create employment for people in the 22-24 age group, especially school dropouts, he said.
The 51 per cent FDI had been approved in basically multi-product, single brands, and this would address the critical employment issues facing the country without displacing the mom and pop kirana stores. However, he did not put a number to the FDI inflow expected from partially opening up of the retail sector.
While Mr Kamal Nath said he himself was not averse to 100 per cent FDI in retail, the new policy had put it at 51 per cent and the detailed guidelineswere still to be worked out. He also pointed out that in India, FDI is more domestic market driven, hence single brand retailers would like to come into the country.
Later in the day, at the World Economic Forum session, Mr Kamal Nath said the hub of world economic activity was shifting from the Atlantic rim to the Indian Ocean and India's technological skills, along with its attractiveness as a manufacturing centre, are fast making it the hub of not only information technology (IT)-enabled services but also manufacturing.
Consistent industrial growth
India was witnessing a consistent industrial growth of 12 per cent for the past few years and the trend was accelerating.
Speaking about the future trends, Mr Kamal Nath said the way forward for India was to capture the potential market through value adding in different fields, especially engineering goods, pharmaceuticals, chemicals, biotechnology and even sectors such as fashion, lifestyle products and leather goods.
He pointed out that India was already the leader in the world's diamond market and that cut and polished diamonds from the country accounted for approximately 85 per cent of the global markets in volume terms.
Mr Kamal Nath said the population in the developed world was aging, hence the workforce, which would comprise not just labour but skilled and technologically qualified professionals as well, would come from the developing countries. He added that India's unique combination of IT, biotech and pharma manufacturing base would mean that it would not only be a business process outsourcing destination but would climb up the value chain to become a knowledge process outsourcing and an engineering process outsourcing destination.
The Minister also referred to the profound changes that had taken place in the consumer base in India.
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