FDI alongwith good governance can create wonders: Experts

Experts on Saturday reiterated that FDI is the need of the hour and with political will and good governance measures, it could prove to be crucial in enhancing development in the region.

They were taking part in a panel discussion on "Why FDI Continues to Elude South Asia" at Observer Research Foundation in Delhi after the release of a book "FDI in South Asia: Policy, Impact, Determinants and Challenges".

The book, published by Springer, is authored by Dr. Geethanjali Nataraj, Senior Fellow, ORF, Dr. Pravakar Sahoo, Indian Economic Growth (IEG) and Ranjan Dash, Wadhwani Foundation.

The book was released by Dr. Rajiv Kumar, former Secretary General of FICCI and Senior Fellow, Centre for Policy Research, Delhi.

The book, based on research that blends theory, empirical evidence and policy, asks and attempts to answer a few core questions relevant to FDI policy in South Asian countries and also indicates a way forward for overcoming the challenges and constraints to enhanced FDI in the region-especially in India, Pakistan, Bangladesh, Sri Lanka, and Pakistan.

Besides Dr. Rajiv Kumar, Dr. Manoj Panda, Director, IEG and Mr. J M Mauskar, Senior Advisor, ORF, participated in the discussion.

Dr. Kumar emphasised that though it has been broadly agreed that FDI is good debt and the region needs FDI, unless the governance deficit is bridged, it would be difficult to improve the investment climate in the country.

He asked the authors to look into issues related to impact of FDI on Micro and Small and Medium Enterprises, impact of FDI on employment with the teeming millions entering the job market every year not only in India but South Asia as a whole and also assess the whether the Indian business really favours and supports FDI in the country.

Mr. Mauskar emphasized on how technology transfer was also important for India to enforce FDI reforms as implementation is the key to all policies. He requested the authors to stress on FDI and technology transfer.

Dr. Panda spoke about the opportunity available to India vis-a-vis China due to the rising of wages in China resulting in loss of export competitiveness in China, leaving the space for other countries to step in and take advantage.

Mr. Sunjoy Joshi, Director, ORF, stressed on the immense potential that exists in the south Asian region to attract FDI. He said that trade and FDI are the key elements of any economic reform programme.

He pointed out that the challenges facing the region are systemic...poor infrastructure, restrictive labour policies, political uncertainties and civil conflicts, weak regulatory systems, needlessly complex procedures for setting up businesses and rampant corruption are just some of them.

He said that the book "FDI in South Asia" is extremely timely in the context of the India's dwindling growth, poor investment climate, and the secular slow - down of growth in other south Asian countries as well.