PM discusses investment models to boost economyUpdated: May 01, 2020 08:27 IST
In the backdrop of the contraction in the economy due to the coronavirus pandemic and the national lockdown, Prime Minister Narendra Modi on Thursday held a “comprehensive” meeting to discuss strategies to boost the economy, with an eye on enhancing investment. The meeting took place even as the government is in the middle of finalising the first round of economic measures to provide relief to different sectors. This, officials aware of development said, may be made public next week.
In a statement, the Prime Minister’s Office said that the meeting discussed strategies “to attract more foreign investments into India as well as to promote local investments in order to give a boost to the economy against the backdrop of the Covid-19 pandemic”.
Hindustan Times reported on Tuesday that the government plans to aggressively push the “Make in India’ programme by offering domestic and foreign manufacturers policy and fiscal incentives to manufacture locally. PM Modi, in his public speeches, has also spoken of increasing self-reliance at all levels within India. The statement on Thursday said: “Various strategies to bring investments into India in a fast-track mode and to promote Indian domestic sectors were discussed [in the meeting].”
The meeting was attended by home minister Amit Shah, finance minister Nirmala Sitharaman, commerce and industries minister Piyush Goyal, minister of state for finance Anurag Singh Thakur and other senior bureaucrats. While there was no official word on the announcement of a stimulus, which has been demanded by various industry bodies, officials have indicated that the government will continue to take fiscal and policy decisions as and when the situation warrants, and the first set of measures could come next week as the lockdown eases.
An official familiar with the proceedings of Thursday’s meeting said that the idea was to make India a global manufacturing hub, at a time when supply chains have broken down and the world is looking for alternatives to China to shift production bases. “The PM has always, from his first term, emphasised the need to improve India’s ranking in the ease of doing business. This has indeed happened. We now have to make a push to be able to leverage the opportunities that exist. This will also be our way to revive economic momentum.” He added that the government is working on relaxing regulatory norms, removing bureaucratic hurdles and providing fiscal incentives to both domestic and foreign investors.
According to a second official, the government has been approached by many developed economies to prepare India as an alternative manufacturing destination because many multinational companies are looking to exit China. India’s main attractions, he said, are its vast domestic market, cheap labour, and a stable and decisive political regime.
The statement said, “It was discussed that a scheme should be developed to promote more plug and play infrastructure in the existing industrial lands/plots/estates in the country and provide necessary financing support.” During the meeting, the PM also, according to the statement, directed that the action should be taken for a more proactive approach to handhold the investors, look into their problems and help them get all the necessary central and state clearances in a time bound manner. Detailed discussions were also held on guiding states to evolve their strategies and be more proactive in attracting investments, it added.
Industry bodies called it an apt policy at the right time and said India should strategically target each company which is relocating from China.Confederation of Indian Industry director general Chandrajit Banerjee said, “We suggest that these [investment zones] should be large zones with a special purpose vehicle to provide approvals and clearances, along with world-class urban infrastructure such as roads, worker housing and facilities, sewerage and low-cost power. Land and labour regulations can also be specifically instituted for these zones to ensure large scale employment.”
Commenting on the possibility of boosting India’s domestic production capabilities, N Venkatram, CEO at Deloitte India said, “Swadeshi 2.0 is about manufacturing from India. This will happen if our own industrialists have the ability to invest in India, in turn encouraging foreign investment as well as manufacturing by foreign companies in India. We also need to look at changes needed in regulation and get the industrialist mindset back. We need to build our economy to its export potential based on our competitive advantages and generate employment.”
Mithun V, partner at the law firm, Shardul Amarchand Mangaldas & Co, said the move is “reassuring” for the global and local investor community. “This is also a very good time for the government to focus on encouraging infrastructure and manufacturing sector investments, especially given the ongoing global backlash against our land border sharing neighbour,” he said, in a reference to China.