New Delhi: Ruling out any “review” of the foreign direct investment policy, commerce and industry minister Anand Sharma has said there are in-built safeguards against FDI finding its way into multi-brand retail and breaching caps in broadcasting and defence production.
Sharma, who took charge of the nodal ministry for FDI on 29 May, said there is no need for a relook at the policy amended in February by the Department of Industrial Policy and Promotion (DIPP).
“At this stage, we don’t see that the time has come for any comprehensive review ... it is too early in the day ... we will see how the new policy is working,” Sharma told the news agency in an interview.
There are safeguards against FDI in sensitive sectors like broadcasting and defence production, while the policy does not allow overseas investment in retail, he said.
The “misunderstanding” on FDI being allowed indirectly in multi-brand retail “is not well placed at all”, he said.
He said there were “effective, inbuilt safeguards when it comes to the sectoral caps, particularly in those sectors which have been sensitive, and (going) by the new policy those areas remain protected ...”
While the policy does not allow overseas inflow into this sector, the changes in February were perceived to be opening the sector to FDI up to 49% in an Indian firm that has a downstream subsidiary firm in retailing.
As India does not allow FDI into multi-brand retail, mega US stores like the Wal-Mart can enter the country only for wholesale trading known as ‘Cash and Carry’.
On the other hand, overseas investment in sensitive areas of defence production and print media is permitted up to 26%.
Referring to the sharpest-ever dip in exports in the last 14 years, the commerce and industry minister said he is concerned over the over 33% shrinkage in overseas shipments.
Sharma would be discussing with finance minister Pranab Mukherjee the measures that can be taken in the budget to help the exporters who are in distress.
“I will be discussing soon with the finance minister the measures which can be put in the budget which will help the Indian exports, particularly in the traditional sectors like handloom, textiles and leather,” he said.
He expressed hope that the country would be able to return to the high-growth trajectory.
“We will be able to sustain the volume and the value of Indian exports at least at the same level (as last year) despite the global shrinkage,” he said, adding that there is “no need to panic”.
India achieved $168.70 billion in 2008-09 showing a meager expansion of 3.4% over the previous fiscal. In fact, the year closed on a positive note thanks to a good showing of about 30% in the first six months of FY09.
However, the country has seen export contraction for seven months in a row as demand for merchandise shrunk in the developed markets of the US and Europe.
The main focus areas would be on the labour-intensive sectors like leather, handicraft, gems and jewellery, Sharma said.
Widespread job losses have been reported by the industry and exporters. The Federation of Indian Export Organisations (FIEO) has put the job loss figures at over one million last year, particularly in the the labour-intensive sectors.