The government will step up reforms to attract more foreign investment, boost manufacturing and bridge the country’s yawning infrastructure deficit as India has a “great amount of impatience” about its growth pangs, finance minister Arun Jaitley said on Tuesday.
Speaking at the India-UK Tech Summit here, he said India has wasted many opportunities in the past and an aspirational nation, it doesn’t want to let go of any opportunity now. “I think one of the great strengths of the Indian economy is that even though we are growing at a faster rate than any major economy, but by our own standard we are still not satisfied. There is a great amount of impatience in India and a far greater amount of realisation that we can grow even faster,” Jaitley said. India’s economy grew by 7.6% in FY16, the fastest among major economies, and policymakers have forecast around 8% growth in FY17. India’s real GDP grew 7.1% in June quarter of the current fiscal.
“Therefore, (we intend to) to reform more, to open more to attract more investment and to expand more in manufacturing. (We need) to fill up the infrastructure deficit faster than what we have been doing,” he said.
Speaking at the event, UK secretary of state for international trade Liam Fox said Britain is a natural partner of the world’s fastest growing major economy with whom it wants to team up to challenge the protectionist sentiments gaining traction around the globe. “It is important that we together challenge the protectionist sentiments that have been gaining traction across the world to remove those barriers that inhibit free and open trade, and to champion to see export and spread prosperity,” Fox said.
India and the UK are inking business deals worth more than £1 billion (R8,300 crore) during British Prime minister Theresa May’s ongoing visit to India. May and Prime Minister Narendra Modi have agreed on a new partnership that will bring together government, investors and experts to work together on urban development, unlocking opportunities worth £2 billion for British businesses over the next five years.
Responding to this, Jaitley said unlike developing economies, voices seeking protectionism were almost absent as the Indian economy expanded. “Normally, it is the least developed and developing economies which have a tendency to cry for protectionism and that is a voice that’s almost not heard in India,” he said, adding: “We are looking to open out and that’s the direction of our economy.”
Speaking at another event on Tuesday, commerce secretary Rita Teaotia said India will identify those sectors and areas where it has strong competitive advantage while negotiating a possible Free Trade Agreement (FTA) with the UK. Citing a study, Teaotia said if India and the UK enter into an FTA, the latter would benefit more. India and the UK both have shown keen interest to negotiate an FTA with a view to boost trade in goods, services and investments.
However, a formal negotiation on the pact cannot start before Britain’s exit from the European Union.
With the clutch of reforms undertaken by the Modi government such as easing of foreign investment regulations and use of Aadhaar platform for delivery of subsidies and the ones that will be put in place soon like the goods and services tax (GST) and the bankruptcy code, the government strongly feels that the country is a better place for foreign investors to put their money amongst all emerging market economies. Even though India’s ranking only improved by one place to 130th position in the World Bank’s latest Doing Business ranking, the Bank too has appreciated steps taken by the government to improve ease of doing business.
One area where India has very good growth potential is manufacturing as the country is trying to increase share of manufacturing in GDP from the present 15% to 25%. “That’s where we will realise that we are creating far more jobs and expanding far better,” the finance minister said.