Assocham Opposed To Curbs On Mncs Entry

The Associated Chambers of Commerce & Industry is opposed to any restriction on the entry of foreign companies into the country. However, it is willing to support any policy on foreign direct investment that is supportive of Indian industry and not detrimental to the consumer.

Any restrictions on the entry of overseas companies into India will erode our credibility. I think it is time to bury clicks like Bombay Club and level playing field, and look at internal issues such as inter-state movement of goods, Assocham president L Lakshman said.

Lakshman said it is not feasible to curb the entry of foreign capital into the country, especially because FDI is an inevitable part of modernising Indian economy.

 

What can you stop now? Can we go back? We cannot. Also, you cannot be selective about foreign investment. Indian industry is now coming to terms with FDI, and the fact is that we need foreign capital, technology and management expertise. Assocham is clearly in favour of the need for foreign investments, he said.

Assocham does not want any major shift in the FDI policy. However, the chamber is opposed to the case-by-case approval through the Foreign Investment Promotion Board (FIPB).

We do not approve of the case-by-case approvals. We have clear guidelines, yet 90 per cent of the cases cleared fall outside those guidelines. If required, the guidelines can be changed to make all approvals open and transparent, Lakshman said.

The Assocham president, however, pointed out that there were several areas in which the government could be supportive of Indian industry without harming the consumers interests and, at the same time, without discriminating against foreign companies.

Among the internal issues, Lakshman particularly feels strongly about capital gains tax, urban land ceiling restrictions and labour market regulations, besides inter-state movement of goods.

Capital gains tax is a big issue. Labour markets are still very rigid. Urban land ceiling restrictions are there. There are companies sitting on valuable urban land. They should be permitted to convert it into cash and flow it into their businesses. Look at the cascading taxation structure we have: octroi, entry tax and sales taxes.

All these are detrimental to business. You can say all this applies to FDI, too. But Indian industry has suffered for a long period from these negative incentives, he said. The Assocham president plans to come up with recommendations to cure the Indian industry of these ills once a new government takes charge.