News: India Inc upbeat on inflow of foreign funds

(TT 17/08/2006) New Delhi - India Inc feels the country is an attractive investment destination despite terror threats, infrastructure bottlenecks and controversies like the Coke-Pepsi pesticide issue.

“The return on investments in India is very good. Also, corporate culture and the environment are favourable and, therefore, foreign investors are constantly eyeing the country. We are certainly an attractive market and will remain so at least in the near future,” said Baba N. Kalyani, chairman and managing director of Bharat Forge, while speaking to The Telegraph.

However, some corporate biggies say despite portraying itself as an investment friendly country, many perceive it as a “difficult destination to do business” with.

Some feel while “we are a developing country”, red tapism and an anti-multinational approach may “pull us down”.

“Small incidents here and there cannot diminish India’s investment potential. We are a growing country and have assumed a significant position globally,” said Kiran Mazumdar-Shaw, CMD of Biocon India.

She, however, was quick to add that less noise on the recent Coke-Pepsi pesticide issue would have been better for all concerned. “Both Centre for Science and Environment and the government should have handled the pesticide issue in a mature way. I somewhere feel this entire controversy has strong undertones of being anti-multinational,” she said.

“The need is to tackle the issue at the roots and not isolate companies and target them. It is unfair. After this episode, India’s image will certainly suffer in the global arena,” she added.

Meanwhile, a survey conducted by Assocham revealed that 89 per cent of the country’s CEOs feel a partial ban on cola sales in certain states on health grounds will not impact FDI inflows.

Franklin Lavin, US under-secretary for International Trade, had said action against the cola giants by some state governments, including a ban on cola production and sale in Kerala, was a “setback” for the Indian economy.

On terrorism, India Inc said it is a worldwide phenomenon. Hence, there is no reason why any investor should single out India on this count.

Regarding infrastructure bottlenecks, industry said the situation was improving. “There is improvement in infrastructure setup but it needs to improve further. However, it is not an overnight process. Also, for any foreign investor, safety and security is of prime importance,” said P. Balendran, vice-president of General Motors India.

India Inc seeks improvement in the connectivity of ports, airports and railways to help facilitate investment in the country.

According to statistics collated by the Confederation of Indian Industry, the country would need an investment of approximately $330 billion in the infrastructure sector in the next five years.

However, to achieve this, annual investment in infrastructure needs to rise from $47 billion in the current fiscal to $84 billion by 2010-11.