New land Act has impractical aspects, needs relook

Written by Kirtika Suneja | Updated: Apr 29 2014, 09:56am hrs
Amitabh Kant, secretary of the department of industrial policy and promotion (DIPP), tells FE's Kirtika Suneja on the plans to spur FDI inflows and ease rules for doing business in India.

Excerpts:

Despite many sectors having been opened for FDI, the inflow has not been impressive and investors are still wary about investing in India. How will you boost FDI

FDI is a function of the economy's growth. Though many sectors have been opened, several are left (closed/restricted) such as railways, construction, e-commerce and defence. We need to look at the existing FDI policies to provide a fillip to these sectors. We need to put more sectors under the automatic route and review the current policy. We are working on a proposal to allow 100% FDI in defence manufacturing.

What about multi-brand retail sector where many political parties are against FDI Can the new government reverse the policy

Governments can come and go but changing such crucial policies has an adverse impact (on the economy). Moreover, FDI in multi-brand retail is a young policy that needs to be tried and tested before being reviewed. We prefer consistent policies that could take us back to the 8-9% growth track. Growth is a function of consistency in policies for a long period, say three decades. Improving sentiments and making it easier to do business here are important.

How will you ease rules for doing business here

We have made us a difficult country to invest and do business in. We need changes across land, labour and taxation policies to improve the investment climate. If domestic investors come back (to invest) then it will lead to a demonstration effect for the foreign investors. We can learn from many states on the different aspects of doing business. Karnataka has done well in finance and tax compliance and Maharashtra is a leader in labour laws, utility and infrastructure while Gujarat has had an exemplary performance in giving environment clearances. On the other hand, Punjab and Rajasthan take the lead in other business and regulatory compliance and single-window clearance.

But the new the Land Acquisition Act is yet to be notified...

The Act will (adversely) impact infrastructure and manufacturing. It (land) is in the domain of the states but (the Act) requires a relook as it suffers from many impractical aspects.

What about the US demand for a more liberal intellectual property rights (IPR) regime

Our view is that India has a consistent IPR policy and a robust regime. Almost 30% of the share of patents granted have been to the US nationals. Between 2005 and 2012, more than 855 patents were owned by foreign companies in India.

The provisions in the Indian Patents Act are fair and unbiased. The Trade Related Aspects of Intellectual Property Rights (TRIPS) provides us with certain flexibilities such as compulsory licensing and denying patents to incremental improvements with ni improvement in efficacy. We have used these flexibilities only twice in the last nine years and a solitary denial of a patent in nine years does not lead one to sweeping conclusions. The issue has been over-exaggerated .