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FM bypasses swadeshi, welcomes foreign investment

Potato chips are welcome! Throwing aside the Bharatiya Janata Party's pre-election rhetoric about allowing foreign direct investment in computer chips and not potato chips, Finance Minister Yashwant Sinha declared that he will welcome investment in the non-priority food processing and export-based consumer industry.

He also claimed his government's swadeshi (economic nationalism) approach would not have a "negative impact" on the FDI flow. "We look at foreign investment in a very positive manner" he said in an interview to a TV channel.

Asked to explain if consumer goods were included in the "non-priority" areas that the coalition government has said should not be a foreign investment domain, he replied: "Not all of them."

"We have a large agricultural base and we should be in food processing in a big way. Food processing is a consumer goods area but if we get high technology, good packaging, and produce for exports, foreign investment is welcome," he said.

However, he added the rider that foreign investment would not be allowed for domestic consumption but would be encouraged for processed food exports.

The finance minister said that any area where Indian entrepreneurs are not in a position to provide competition, or to give satisfaction to the consumer, "those are the areas where we'll have to look at the whole spectrum of foreign technology and foreign capital."

Outlining his government's foreign investment policy, Sinha said it was welcome in important sectors such as infrastructure, core industries, and sectors where exports are expected or where technology was needed. He defined non-priority areas as those where India was self-sufficient and did not need foreign technology or capital.

Elaborating on swadeshi, the finance minister said it was not a government order and was a mere response to the emerging international situation. The finance minister insisted that swadeshi was to "protect and promote" national interest, but certainly did not amount to "defending the inefficiencies of Indian industry."

If Indian industry is not able to give quality products, then foreign participation will certainly be promoted for the latter's technology, he added.

Sinha criticised the economic reforms for encouraging foreign investors at the expense of domestic firms. "Over the past seven years, an impression has sought to be created that India cannot be built by Indians, that to progress economically, India must receive massive doses of foreign investment otherwise we just cannot go forward, that we are utterly and helplessly dependent on the foreigner," he complained. The BJP, he added, thought otherwise.

Referring to the BJP's agenda of internal liberalisation, Sinha said the party had always been in favour of freeing Indian entrepreneurs. "Now it is clear that by internal liberalisation we mean we should do away with all the internal unnecessary controls that exist for the Indian entrepreneurs. That is where we deepen, broaden, and accelerate," Sinha said.

The finance minister said the BJP slogan "micro chips yes, potato chips no" was a simplistic presentation to put it in stark contrast. It said "high technology yes, consumer goods no. It was a turn of phrase." He averred that after taking office, he had met a number of foreign investors and they were not worried about the BJP policies on foreign investment.

"We might be worried but they aren't worried," he said, "because a chap who is coming to build roads, or airports, or power plants, or whatever in infrastructure, he's not in the potato chips business. So he's not worried about whether we're promoting investors in potato chips or not. And the chaps who want to make an investment in an area in which they are not welcome in this country will not come," he added.

Meanwhile, at a civic reception in Hazaribagh yesterday, Sinha said that the tax revenue mobilised within a state would be spent on its development.

He said that financial problems should not come in the way of the development of a state. To correct regional imbalances, the Centre would draft special plans for the development of backward areas.

He emphasised the need for chalking out five-year plans at the panchayat (village council) level, and added that this would acclerate the procees of rural development.

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