By Hemanta Pande: In a recent interview to the Press Trust of India (PTI) in Washington, US President Mr. Barack Obama said, “Many in the American business community had expressed concerns that the investment climate in India is deteriorating.”
“They tell us it is still too hard to invest in India. In too many sectors, such as retail, India limits or prohibits the foreign investment that is necessary to create jobs in both our countries, and which is necessary for India to continue to grow.” He added.
However, Mr. Obama was careful not to be directly critical of the negative investment climate in India but cited the concerns of the American business community to make his point.
It is to be noted that, last year, Manmohan Singh Government was forced to reverse a decision to allow foreign direct investment (FDI) in the $450 billion retail sector after Trinamool Congress, a key ally of the government, opposed the proposal.
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Responding to Obama’s remarks, Commerce and Industry Minister, Anand Sharma said, “There is always a difference between perception and reality.” He also confirmed that India remains one of the most attractive destinations for foreign investors. In last financial year, India received FDI in excess of $50 billion. It was more than 34 pc or 35 per cent higher than the previous years.
Corporate Minister Veerappa Moily said, Mr Obama was not properly informed and blamed “international lobbies like Vodafone” for spreading negative information, particularly when India’s economic fundamentals are strong.
Meanwhile, in its recent report, the United Nations Conference on Trade and Development (UNCTAD) has stated that India is among the top three FDI destinations. The Japanese Bank for International Cooperation’s (JBICs) recent report placed India at number two and in the long-term, they have put India at number one. Ernst & Young has also said that over 4/5th of the FDI in South Asia came into India.
The Communist Party of India (Marxist) also pointed out that, Mr. Obama’s remark is a brazen attempt to put pressure on the UPA government to open FDI in retail sector. The CPI(M) urges the government not to open up retail trade in foreign supermarket chains, which will endanger the livelihoods of millions of small shopkeepers and traders in our country.
In fine, it is not exaggerate to say that Mr. Obama’s observation on FDI as the panacea for India’s economy is the interest of US, not India. With the American economy in dire straits, it would suit American investors to park their capital in the largest market of the world and accumulate more profit.