November 23, 2001	Friday	Ramazan 7, 1422

NEW DELHI, Nov 22: India has been a “sleeping elephant” in economic reforms, Indian Commerce and Industry Minister Murasoli Maran said on Thursday.

Maran told a two-day EU-India Business Summit that he agreed with foreign investors that reforms in India had to be accelerated.

He said the government would push ahead with reforms in the crucial power, telecom and road sectors to attract private investment.

India is less an economic tiger than an elephant — a sleeping elephant just awakened. Its steps are measured and steady, Maran told the summit.

But we agree that an elephant also can walk faster and we need to increase our pace of reforms to keep step with the fast moving world.

Foreign investors are beginning to leave India for emerging economies like China, as they run into a cobweb of rules, regulations and intervention at the state level.

After moving in en masse during the early 1990s when the government unleashed sweeping free-market reforms, major European, American and Asian groups are now pulling out.

Maran said the government had taken steps to review India’s foreign investment policy.

We are focussing on making it simple, transparent and non-discriminatory. We have just established the Foreign Investment Implementation Authority (FIIA) to expediate Foreign Direct Investment (FDI), he said.

The minister said the FIIA had a mandate to help foreign investors obtain necessary approvals, sort out operational problems and meet various government agencies to find solutions to problems.

FDI in India jumped by 15 per cent in 2000 compared to the previous year to $4.2 billion.

However, a commerce ministry report earlier this year said that in its first decade of economic liberalization India only managed to attract FDI worth $23.7 billion just slightly more than China received in a six month period in 1999.

On the investment front, the EU’s share in India’s FDI approvals from 1991 onwards accounts for 25 per cent of the total $15.1 billion, said Maran.

Actual inflow, however, is only $3.66 billion giving a realisation rate of only 24.6 per cent, he added.

European Union Trade Commissioner Pascal Lamy said the inadequacy of total investment flows to India reflected the need for continued economic and regulatory reform.

I know that India is working hard to cross off point by point, an ambitious economic reform agenda. The impact of this can already be felt in telecommunication, insurance and the removal of caps in FDI, said Lamy.

We are now watching closely to see how the next wave of reforms related to labour, banking, infrastructure funding and fiscal responsibility fare, he added.

Lamy also urged India to ease bureaucratic controls and red-tape in the liquor, power, transport and telecom sectors.

Foreign firms say it takes them longer to start operations in India than in other developing countries, even after receiving the necessary government clearances.

For instance, foreign investors in the liquor trade say they require 32 different licences or approvals from government agencies just to set up a distillery in some Indian states.

A bureaucrat will say ‘very good’ and then not clear the project. The local partner says ‘no problem’ and this could be the beginning of all your problems, said one foreign investor.—AFP