PM Modi to hold dialogue with global investors on November 5

By: |
October 6, 2020 3:30 AM

One of the key issues that the finance ministry — which is organising the roundtable along with the National Investment and Infrastructure Fund — wants addressed urgently is the concerns about the “enforceability of contracts” in India.

India’s gross FDI inflows rose by as much as 20% on year last fiscal to a record $74.3 billion, before the pandemic hit.

Prime Minister Narendra Modi will hold an “exclusive” dialogue with global investors at a virtual Gobal Investor Roundtable on November 5, as India steps up efforts to lure multinational companies at a time when anti-China sentiments are growing globally.

One of the key issues that the finance ministry — which is organising the roundtable along with the National Investment and Infrastructure Fund — wants addressed urgently is the concerns about the “enforceability of contracts” in India.

In this context, economic affairs secretary Tarun Bajaj has written to legislative department secretary G Narayana Raju, highlighting that several global investors have consistently flagged concerns about the time and the cost involved in getting contracts honoured in India, including by the central/state governments and various public agencies. One of the important issues here is dispute resolution in public infrastructure contracts.

Bajaj has suggested that swift action be taken to operationalise special courts provisioned under Section 20-B of the Specific Relief (Amendment ) Act 2018, according to which the state governments, in consultations with the chief justices of the respective high courts, can designate one or more civil courts as special courts.

The dialogue is the latest of a series of meetings, chaired by Modi, to not just hear out investors’ concerns but also make concerted efforts to resolve nagging issues through discussions among several wings of the government. The government has decided to compile a list of suggestions shared by global investors in their meetings with the Prime Minister over the past six years and the actions taken on them before the planned meeting next month.

Since domestic private investments have remained elusive in recent years, the government has been pinning hopes on larger inflows of foreign direct investments (FDI). India’s gross FDI inflows rose by as much as 20% on year last fiscal to a record $74.3 billion, before the pandemic hit.

Even before the pandemic struck, the share of gross fixed capital formation (GFCF) in GDP collapsed to 29.8% on year in FY20 from as much as 34.3% in FY12. GFCF contracted by 6.5%, the lowest in the current GDP series, in the January-March period, having recorded a third straight quarter of fall. In the June quarter, thanks to the pandemic, real GDP contracted by a record 23.9%, year on year, with the GFCF having slid by a steep 47.1%.

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