Govt trying to build consensus: FM

India has told the United States that it is trying to further liberalise the retail and defence sectors for foreign direct investment (FDI).

“Discussions are underway to build a consensus on further liberalisation of the FDI policy in these sectors,” Finance Minister Pranab Mukherjee said at a function organised by the Confederation of Indian Industry and The Brookings Institution, in Washington last evening.

Government officials had earlier told Business Standard the issue of allowing up to 49 per cent FDI in sectors like multi-brand retail, defence, media and civil aviation through downstream investment by Indian-owned and -controlled entities would be discussed at an inter-ministerial meeting. (See Business Standard of June 27)

At the US-India Economic and Financial Partnership meet, Mukherjee said ownership and control were now central to the FDI policy and the methodology in this regard had been clearly defined.

US Treasury Secretary Timothy Geithner said India was at a point where the future growth would depend on the success of next wave of reforms. “The Indian economy has outgrown the financial system and it has got a huge need for infrastructure financing, capital financing for running business,” he said. From the US perspective, Geithner said the outlook on economic reforms in India was crucial.

Mukherjee assured the US of continuing with economic reforms, saying they had not slowed and the United Progressive Alliance government was committed to them. “It (reform) is a constant exercise. We are doing so. Structural reforms have been done. Reforms in the mutual funds market, insurance sector, banking sectors, pension, etc are underway and the necessary legislations have been introduced in Parliament,” he said.

He said his government had to take other parties into confidence to get these bills passed in Parliament.

On the move to allow foreign individuals to invest in mutual fund schemes, with an overall ceiling of $10 billion, he said, “We have decided to allow Indian mutual funds to directly attract investments from foreign investors, who meet with the know-your-customer guidelines, with a view to facilitate investment opportunities in India.”

“We (India and the United States) have common goals and share a vision of peace and prosperity for the humanity at large. Our strategic partnership presents a wonderful opportunity for each of us to grow and contribute to global well being.”