An expert panel, on CNBC-TV18, comprising former DIPP secretary Ajay Dua, Lalit Kumar, partner, Jyoti Sagar Associates, Vivek Gupta of BMR Advisor, MV Kotwal, president- heavy engineering, L&T and Amitabh Chaudhary, CEO, HDFC Life while hailing the government's initiative to open the economy to foreign investment say that certain clarifications are needed for adequate implementation.
Emphasising that the move will also boost indigenous manufacturing and R&D in the defence sector and industry, the experts add that the government needs to do more on the ground to create a conducive environment for domestic and foreign investment.
Below is the edited transcript of the expert reactions on CNBC-TV18
Q: What is your view on the hike in the FDI cap in multi-brand retail cap to 74 percent?
Gupta: I think the government recognised that it was a reality that no multi-brand retail investment was expected before 2014, the way the policy was proceeding. The last set of clarifications further dampened the enthusiasm and it was a fit case for the government to evaluate all the clarifications.
So, all the meetings that Anand Sharma has had with the retailers seems to have borne fruit. There are parts of the policy which can be easily evaluated again even within the framework of the overall policy. The announcement is positive and needed a little bit of influence in Europe and in Washington.
Q: Will the decision on the single-brand retail route —which is 49 percent automatic and above that through the FIPB route make any difference?
Gupta: There are a lot of single-brand franchises today that hope to convert into some sort of equity organisation. Though I probably do not view this as a step to trigger the flow of millions of dollars into the country, I view this more as a facilitative tool to administer conversion of licences into minority stakes for the foreign party.
Q: To my mind, the big bold decision of the evening is what they have actually done with defence. Would you agree?
Dua: I think so. What has been done is very significant for Indian manufacturing. But it has to necessarily be state-of-the-art technology coming into the country, as our manufacturing as we all know does not necessarily use the highest technology.
To that extent, if we are going to get technology, it will be equipping us for the future. I welcome that decision, but it is going to be on a case to case basis.
It could be 27 percent, it could be 100 percent, and it has been kept open at that. I look at these 12 decisions which have been taken the 13th is about raising the limit for insurance which is reiteration of an earlier decision.
I think of the 12 decisions which have been taken, as many as eight are only for changing the route from FIPB to automatic.
There are four other decisions for hiking limits of which telecom going up from 74 percent to 100 percent is very significant. The second one is defence, about which we just spoke.
The third is credit information services and finally the asset reconstruction companies. The telecom sector also, provided we make a break from the past. What the industry has seen is not only saturation but also a whole lot of regulatory issues.
If we want more money to come in there, more foreign funds, I think we need to clear out other things, not merely FDI regulations. Asset management companies and credit information services, I think it is going to be a trickle.
It may come immediately but it is not going to make much of a difference to the USD 35 billion which we have been averaging for the last nine years and about which the minister also talked.
Q: On this issue, as far as pharma brownfield is concerned, there is this mix of tardy coordination between various ministries. You have had the Arun Maira committee put out its recommendations and that was, if my memory serves me right, almost two years ago. You have then had discussions taking place between the DIPP and of course the health ministry and so on and so forth. Then the Prime Minister's office has got involved. Why can't we just get our act together, be aligned and on the same page as far as this particular sector is concerned?
Dua: I think the recent acquisitions by foreign companies of the Indian pharmaceutical sector including the ones which make life-saving drugs are the ones which really set the cat amongst the pigeons.
It was found that foreign companies, Japanese, American and others were walking into this critical sector and it was on the automatic route. That is when the Indian industry as well as the government had woken up and said that we will like to shift this to a prior approval route.
That means the FIPB, but with various committees which you mentioned, taking their recommendations into account, it was said, let these come to the FIPB.
We will have a look there but it was seems that the concerns of various ministries, including the DIPP which had some issues about it were not being taken in its entirety viewed by the FIPB.
That is why the proposal has been moved by DIPP saying in Brownfield industries, if it is up to 49 percent, we would like this matter to be addressed.
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