Better infrastructure will increase FDI, says Montek

Foreign Direct Investment (FDI) inflows in the economy could grow three times if substantial steps were taken to give investors the perception that the government was improving infrastructure, said Planning Commission Deputy Chairman Montek Singh Ahluwalia.

"Concession agreements were expected to be signed by the end of the year, for the 30 build-operate-transfer road projects being implemented by the private sector," he said, adding that agreements for 18 projects had already been signed.

Bids for upgrading the Delhi and Mumbai airports were also expected to be invited within a month and the Cabinet note on the National Urban Renewal Mission would be sent to the Cabinet in September, he said, while addressing a meet organised by the American Chamber of Commerce in India.

On privatisation of public sector undertakings, he said it was possible to achieve 7 per cent economic growth even without a privatisation policy. "Even at the state level, the only ideological resistance is to privatisation and not to other reforms. If you put that (privatisation) aside, you will not have difficulty in achieving 7 per cent growth if other reforms are undertaken,' he said. US Ambassador to India, David Mulford, said in order to attract the kind of investments China did, India would have to open up large chunks of its economy""including the retail, real estate, agriculture sectors "" to foreign direct investment.

Mulford also said that while there was a sharp rise in foreign institutional investor (FII) inflows into India, foreign direct investment (FDI) had stayed relatively sluggish.

"This is the collective judgement of world money on the FDI attractiveness of India," he said, adding that there was a perception that investors had to be ready to pull out of the market relatively fast.

"In India, FDI is invited on very specific terms. The conditionalities are very tiresome for investors," Mulford said, adding that, "the tendency to over manage the process contributes to the complexity of the investment process."

He said energy, infrastructure, agriculture and financial market liberalisation were some of the constraints in India's ability to realise consistent and high growth.In the areas of energy and agriculture, India and the US could cooperate on issues related to civil nuclear energy, commercialisation of agricultural research, university-to-university collaborations and extension systems.