Projecting India as an exciting FDI-friendly destination, Finance Minister P. Chidambaram has called upon American and other foreign investors to take advantage of the country’s massive push for infrastructure development and reap high returns.
“FDI limits have been increased in several sectors, including retail, civil aviation and telecom, and restrictions in the banking sector have been eased,” he told a gathering of US investors in Washington as he listed the recent steps to make India more attractive for foreign direct investment.
FDI up to 100 per cent is now allowed under the automatic route in most of the sectors/activities, with investors just required to notify and file documents at the regional office of the Reserve Bank of India, he pointed out.
At the event organized to mark the first closure of IDFC’s second infrastructure fund, Chidambaram said foreign institutional investors have committed $ 644 million and exuded confidence that the target of $1 billion would be achieved soon. IDFC is the top Indian agency tasked to steer private investment flows into the country’s infrastructure sector.
Chidambaram dwelt on India’s ambitious plan for $1 trillion infrastructure investment to develop power, roads, ports and civil aviation during the Twelfth Plan, with nearly half of the investment set to come from the private sector.
“There is huge opportunity for foreign investment,” he said and spoke of the massive projects underway such as the Delhi-Mumbai Industrial Corridor, entailing over $ 90 billion in investment, with nine mega industrial zones, high speed freight lines, three ports, six airports, a six-lane intersection-free expressway connecting the two big metros and a 4000 MW power plant.
India, he said, has in recent years emerged as one of the leading PPP (Public Private Partnership) markets in the world, aided by a slew of policy and institutional initiatives. There are over 1000 PPP projects in the infrastructure sector with a total project cost of about $97 billion.
listing the policy interventions and tax incentives to encourage Infrastructure Development Funds, he told the investors that the IDF income is exempt from income tax and withholding tax on interest payment on borrowings of IDFs has been reduced from 20 per cent to 5 per cent.
Chidambaram separately took up the infrastructure investment issue at a meeting of G20 Finance Ministers here, making the case for larger investments in infrastructure in emerging markets. He mooted the creation of special windows in the World Bank and other multilateral financial institutions to promote finance in support of infrastructure development. He welcomed the proposal to set up a new and dedicated financing facility called the Global Infrastructure Facility at the World Bank.