Foreign Firms Will Not Wipe Out Domestic Units:Fm

Union finance minister P Chidambaram has assured Indian industry that opening up the economy to increased foreign participation does not mean domestic industry will be wiped out by foreign companies. In fact, he said, reforming the un-reformed sectors would make domestic industry more globally competitive in terms of quality and efficiency.

The minister was addressing the valedictory session of the 12th International Engineering Trade Fair being held in the capital for the past one week.

Chidambaram said, The industry apprehension that it will be wiped out as we open up is becoming stronger. However, this is not so. He cited the example of the capital goods industry which developed considerably after it was thrown open for foreign equity participation.

 

In the first three years of liberalisation, we imported a lot of capital goods which led one to believe that the domestic industry was suffering. However, the reverse has happened and the domestic capital goods industry, which is growing at a rate of 16.5 per cent, has become globally competitive and is deterring capital goods import into the country, Chidabaram said.

The minister also reiterated that India has to take lessons from Japan since it has emerged as an economic superpower in the past 50 years. The country, which transformed itself from a war-ravaged economy to its present status, had practised many economic ideologies which can be repeated in the Indian context, he said.

Japan is almost as densely populated as India but has managed to keep its economy open and competitive, deficit low, has promoted thrift, savings and investment and also underlined the virtues of productivity and efficiency, the minister pointed out. These are the lessons that can be learnt by India, he said.

Chidambaram also cited Korea as the next Asian economic super-power, poised to get a membership into OECD. Japan is the only other Asian nation to be a member of OECD. Korea, which will be the partner country at the next IETF in 1999, has achieved tremendous growth rates in the past 30 years.

The minister also observed that instead of depending on western powers such as the US, UK, France and Germany to help us with our development experience, India is turning more towards Asian countries and seeking their help to usher in economic progress within the country.