My greetings to you all

Investment Prospects in South Asia

The World Bank's recent report on investment climate in South Asia is revealing. Though India has ranked top in terms of the prospects for attracting investment in the region, the Bank has catalogued many gray areas that acted as stumbling blocks for speedy investment in India. One among them is procedural delay in sanctioning the projects in view of the approvals that have to be obtained from multiplicity of authorities at the Central, State and Local levels for getting the work moving. There is a maze of rules and regulations that govern the approvals of these projects. Sometimes, these delays take months and years together. By that time, the investor must have spent considerable time, resources and energy for getting the project through. He is left with two options then. One, call it a day or two, take the efforts to the logical end. Many a time, the investor goes for the first option.

We are now entering the 16th year of our reform process. I must say that our reform structure is quite matured and we cannot find any alibi by telling that we have to put our reform apparatus in order to streamline the delays. Significantly, the delays are procedural and not policy related. Many such delays are taking place in approving the FDI in sectors where we have a clear policy to attract foreign direct investment. In no way, we can condone such delays, whether it happens at the Central, State or Local level.

Many of the multi-national corporations are setting up production bases in India not only to cater to the continental market of India but also to the expanding markets in other countries in the SAARC. Some of the countries in the region are fast picking up as attractive investment destinations like Bangladesh and Sri Lanka. Let the facts speak for itself. In the case of textiles and garments, Bangladesh is poised to outwit India in attracting investment. That country's export of textiles has increased considerably mainly due to investment from abroad. Of course, these countries have internal problems that act as deterrent to attracting investment. Yet, in the recent days, there has been considerable spurt in investment into these countries. Once the internal problems get sorted out, these small countries-barring Bhutan and Maldives, which are choosey in inviting FDI-may, get more investment and even some of the relocations of production bases from India into these small countries because there is a perception shared by increasing number of investors that India is getting overheated.

We cannot adopt an indifferent policy as far as FDI into the manufacturing sector is concerned, where there is a considerable investment gap. To cover that increasing gap, we require more inflow of FDI. That is possible only when we create conducive atmosphere for not only for approving the FDI but also for speedy execution of the projects.