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Govt plans Foreign Investment Regulatory Board to please Indian industry

Rajesh Ramachandran in New Delhi

In an effort to please Indian industry, the ruling Bharatiya Janata Party has proposed a Foreign Investment Regulatory Board.

The finance ministry may also set up an exclusive department to promote Non Resident Indian investment.

"Indian industry speaks the language of the Swadeshi Jagran Manch. They want stricter norms for foreign investment and joint ventures. A parliamentary committee that works on the lines of the railway board is being mooted to monitor foreign investment," a senior BJP leader told Rediff On The NeT.

The concept of a regulatory board was given currency almost two years by BJP economists at a brainstorming session at Hedgewar Bhavan, the Rashtriya Swayamsevak Sangh headquarters in Nagpur.

It was felt a BJP government should monitor multinational corporations through an ombudsman. This ombudsman would continually assess the impact of foreign investment on the Indian economy.

BJP leaders claim that instead of exporting value-added products and services, many MNCs export basmati rice, marine products and leather goods which have nothing to do with the capital goods these corporations import into the country.

Finance Minister Yashwant Sinha was present at the BJP/RSS meeting in Nagpur where the need to delineate areas for foreign investment was underlined.

"The rise in foreign investment should be proportional to the rise in national savings. The Indian economy will not be able to absorb foreign investment if it is not proportionate to national savings. The regulatory board has to fix the parameters within which foreign investment is allowed," says a BJP economist.

Some BJP leaders doubt if Sinha, who has retained finance ministry officials who worked with Dr Manmohan Singh and Palaniappan Chidambaram, will be allowed to set up such a regulatory board.

During his recent trips abroad the finance minister reassured investors not to worry about the clamour for Swadeshi and reiterated that MNC interests will be taken care of.

When the FIRB is set up, the existing Foreign Investment Promotion Board will become redundant. Industry Minister Sikander Bakht, however, stated recently that the FIPB will not be scrapped.

From its 1991 election manifesto onwards, the BJP has lured NRIs with promises. A separate department is being proposed to supervise NRI investment.

Earlier BJP manifestos said the party would follow the Taiwanese experiment and promote exclusive science-based industry parks with townships, investment opportunities, research and development, schools and other facilities for NRIs.

"The annual NRI savings was pegged at $ 100 billion almost seven years back. It could be $ 400 billion now," says a BJP leader. "We have to help NRIs invest in India on a non-repatriable basis, because if the money is taken back it would be similar to foreign investment."