With various policy measures that help improve the ease of doing business in India, the Government is hopeful that such domestic reforms will mitigate global shocks and boost economic activities and investment flows into the country.
Addressing the Brazil, Russia, India, China and South Africa (BRICS) investment seminar here, ahead of the five-nation summit in Goa on October 15-16, Finance Minister Arun Jaitley on Thursday said, “Domestic reforms will neutralise any adverse impact of the global slowdown. The Government has put Foreign Direct Investment (FDI) on the automatic route in almost 90 per cent of the areas that are eligible for foreign direct capital.”
Stating that the ease of doing business has improved massively since the Modi Government came to power, he further said, “Many sectors have been brought into the automatic route and now we don’t have any instance of cases pending indefinitely before the Foreign Investment Promotion Board (FIPB).”
“Over the last two-and-a-half years most of the sectors have been reviewed and we now have probably the most open FDI policy in the world with 90 per cent of FDI coming in through the automatic route,” he said.
“Our ranking both in the ease of doing business and also in Global Competitiveness Index have moved up significantly in the last few years. And this has been aided by a large number of policy initiatives which have been taken by the Government,” the Minister added.
Expressing concern over increasing protectionist tendencies in the developed world, Jaitley warned that growing populist backlash against globalisation and free trade could have an adverse effect on the world economy.
“If developing countries see a trend of protectionism, the spillover impact on the policies in other parts of the world would be adverse,” Jaitley said.
lauding the States for their competitive spirit in making themselves business-friendly, he said, “The other silver lining is that the States have also become extremely competitive and more investment-friendly”.
Admitting that Britain’s vote to leave the European Union and aggressive criticism of trade deals in the US presidential poll debates were “worrisome developments”, the Finance Minister hoped that the fears about free trade would subside once the American presidential election was over.
“The tenor of the debate is more protectionist in nature during the elections and much less when you get back to business as usual,” Jaitley said, while delivering the key-note address at the BRICS Seminar on “Investment Flows: Challenges, Opportunities and Road Ahead” in Mumbai.
The Finance Minister said that aggressive push to domestic reforms could neutralize the impact of ongoing global slowdown to a considerable extent.
Jaitley pointed out that the BRICS as a concept had taken a concrete shape and the areas of cooperation among the member nations were ever increasing. “We now have a BRICS institution in the form of the New Development Bank and in a remarkably short period of time it has initiated its own projects which it is financing. A contingency reserves arrangement is in place now and there is going to be increased cooperation in the area of customs and taxation,” the minister said.
Reserve Bank of India (RBI) Governor Urjit Patel, who was also present at the seminar, said that BRICS must work on improving business environment, while SEBI Chairman UK Sinha called for establishment of more BRICS institutions like New Development Bank.
Organized jointly by Ministry of Finance, RBI and SEBI, the BRICS Seminar is a precursor to the BRICS Summit being held in Goa on October 15 and 16. The high-level summit is being held with the theme of Building Responsive, Inclusive and Collective Solutions.