India’s economy is capable of absorbing $50 billion in foreign direct investment per annum, finance minister P Chidambaram said on Monday, adding that the government is committed to reforms to tackle a large current account deficit.
Addressing a news conference during a visit to Tokyo promoting India as investment destination, he also reiterated that growth in Asia’s third-largest economy was expected to accelerate to 6.1-6.7% in the current fiscal year to March 2014, against the estimated 5.0-5.5% growth recorded last fiscal.
“FDI flows into India are quite positive... think we can absorb, easily absorb $50 billion of FDI every year into India,” said Chidambaram.
India’s financial account, which includes foreign direct investment, portfolio investment and overseas borrowing by Indian companies, showed a surplus of $31.1 billion in the December quarter for the fiscal year ended March 31.
The government is struggling to boost the economy, which has posted its weakest growth in a decade. Removing investment barriers, many of which date back to before India started opening up its economy in the early 1990s, has been key to the government’s push to restoring investor confidence.
“A new trade policy will be announced in about three or four days and that will show that we are committed to reform,” said the Harvard-educated former lawyer.
Chidambaram repeated his recent pledge that the Centre would simplify “outdated” foreign investment caps in a bid to attract more investors and tackle its large current account deficit, but did not specify which sectors he wants to reform.