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India plans to allow foreign investment in mining, retail trade
Finance Minister has promised to open the country's retail trade and mining sectors to foreign investment.
Finance Minister promised on Monday to open the country's retail trade and mining sectors to foreign investment despite persistent opposition from communist allies, saying India needed to learn from China.
Finance Minister P Chidambaram, who presented the annual federal budget to Parliament, urged lawmakers to "take a pragmatic view" and see how China had greatly benefited from liberal policies on foreign capital.
China has received $500 billion in foreign investment since it started opening its economy in the 1980s — as much as $60 billion just in 2004.
India received less than $4 billion last year.
Chidambaram recalled how the Chinese finance minister looked in his direction when disclosing China's foreign investment figures at a recent meeting of the G-7 countries, to which India and China also were invited.
India began liberalising its economy in the early 1990s, but progress has been slow because of opposition from domestic industries and political parties.
While several manufacturing sectors have been opened to foreign capital, there are restrictions in many areas.
"Our own experience has been that automobiles, software, telecommunications and electronic sectors have benefited from (foreign direct investment) and have assimilated themselves into the global production chain," Chidambaram said.
"I believe there are opportunities in other sectors as well such as mining, (retail) trade and pensions," he said. The government will "come forward with suitable proposals, and when we do I hope we can take a leaf out of the book of China."
Wal Mart, Starbucks, M&S, Chanel and Tesco are some global brands that are keen to enter country's $180 billion (euro135.75 billion) retail market, which is currently dominated by more than 12 million "mom and pop" shops.
Chidambaram's comments came days after the government's annual report card on the economy also urged easing on foreign investment rules and slashing customs duties to make India globally more competitive.
The 5.14 trillion-rupee Budget unveiled Monday also proposed a 5 per cent cut in the topmost customs duty and sought to lighten the burden of individual taxpayers.
There was no immediate comment from the Government's communist allies, who staunchly oppose economic liberalisation.
Chidambaram, though, tried to placate the communists by proposing a big jump in budget allocations for education, health care and rural development schemes.
