India to Return to 7-8% Growth By 2015
Apr. 26 – In several recent statements both to the press, international investors, and the Indian parliament, India’s President, Prime Minister, and Finance Minister have stated that they are confident in returning to seven or eight percent annual growth as early as 2015. They have also stressed that foreign direct investment (FDI) is critical in this regard, signaling further facilitation in the times to come.
“We are confident that we will return to 7-8 percent growth bracket in the next two to three years,” said President Pranab Mukherjee on Tuesday, speaking to the IFTDO’s World Conference and Exhibition in New Delhi. “We need to revitalize investment in the country for this purpose. We welcome foreign investment which has a critical role in bringing in modern technology and globalizing our economy.”
Prime Minister Manmohan Singh recently expressed similar sentiments to the Indian Parliament.
“We do not believe growth rate will stay where it is today. We will use all our policies to push up growth rate. We hope and it is our confidence that in two to three years economy will bounce back to high growth of 7 to 8 percent”.
Agreeing that foreign investment is key to such rapid development, in an interview with the American business news agency CNBC Finance Minister P. Chidambaram said the country must redouble its efforts to attract foreign investment.
“India can easily absorb US$50 billion a year in FDI alone. Last year, we nearly had US$46 billion of FDI,” he said.
Minister Chidambaram said the government is currently reviewing sectoral FDI caps to further facilitate such investment, as many were “now outdated” – strongly indicating the government may plan to lift some limits on FDI in the country.
The Finance Minister has recently been on a world tour to draw greater foreign investment into the country, meeting potential investors in the United States, Canada, Britain, Hong Kong, Singapore, and Japan. He repeatedly expressed his confidence in obtaining eight percent growth by 2015, and also said this growth rate would be sustainable over the long term.
According to sector analysts, recent policies have alleviated concerns regarding multi-brand retail and retrospective capital-gains tax, noting that these improvements are already helping India regain its prominence as an investment location.
“I am seeing increased interest in FDI into India from both the United States and Western Europe, and our own India operations are generating more international clients. In part, last year’s downturn in FDI was caused by regrettable government decisions concerning two specific issues over multi-brand retail and retrospective capital gains tax, however, these have now been satisfactorily resolved and we believe India’s growth should return to normal levels,” he said.
Dezan Shira & Associates is a specialist foreign direct investment practice, providing corporate establishment, business advisory, tax advisory and compliance, accounting, payroll, due diligence and financial review services to multinationals investing in emerging Asia. Since its establishment in 1992, the firm has grown into one of Asia’s most versatile full-service consultancies with operational offices across China, Hong Kong, India, Singapore and Vietnam as well as liaison offices in Italy and the United States.
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