India must beef up infrastructure for higher FDI inflow

India should take up steps to reduce procedural delays and beef up infrastructural facilities if the country wants to match China in Foreign Direct Investment (FDI) inflow, said Alan Rosling, executive director, Tata Sons.

Delivering the keynote address at the Tata Confluence-2004, Rosling said that while the FDI inflow in developing countries has increased from $30 billion to $210 billion in the last 20 years, the bulk of the FDI has gone to China, which has got $55 billion as FDI.

"I believe there is a need to upgrade infrastructure facilities considerably and reduce procedural delays if more FDI needs to come to India," said Rosling on the sidelights of Confluence-2004.

Rosling said that it will make little sense for foreign companies if it takes three days for a truck to remove goods from a port in India or if delays take place in getting various permits and sanctions from government agencies.

"For a foreign company, if it takes three days in getting a truck in or out of a port or if several precious days are lost in getting permits and sanctions, it makes little sense to invest in India. These are the areas where India needs to work harder," said Rosling.

Rosling added that multi-national companies do face major problems in handling Indian labour. Although he did not mention trade unionism in the country, he referred to labour unions, which have a strong presence in the country.

But Rosling appreciated the flexible labour laws that have been effected in the Special Economic Zones (SEZs), where companies have the freedom to increase or decrease the labour force according to their requirements.

"But these laws should be applicable in areas outside SEZs as it is not possible for all companies to function from within an SEZ," Rosling said.

Commenting on how China has been able garner a major chunk of the FDI, Rosling said that the per capita GDP of China has more than doubled compared with India.

"As a businessman, a foreign investor would want easier procedures, a more deregularised market, simplified and speedy clearances and decent infrastructure, which China has been able to provide," said Rosling.