Kamal Nath, the global FDI person

EXIM MATTERS

The commerce and industries minister Kamal Nath has won international recognition as global FDI person of the year from a publication no less than the Financial Times group. It is a well deserved recognition for one of the most hard working and internationally visible ministers in the Union Cabinet.

Kamal Nath now joins the illustrious company of previous winners, which include Mexican President Vincente Fox (2003), Brazilian President Luis Inacio Lula da Silva (2004), Mayor of Seoul Lee Myung-bak (2005) and Premier of Ontario Dalton McGuinty (2006). The awards recognize the political and business leaders around the world who have been the most proactive, dynamic and innovative in securing foreign investment and improving the business environments of their jurisdictions.

The citation applauds not only Kamal Nath's efforts to attract foreign businesses to India, but also his efforts to boost exports. The citation recognises the results, which have been a substantial increase in FDI inflows to India and a rise in export volumes last year, contributing to the continued economic development of the country and adding to its attractiveness as an investment location.

When Nath took over the commerce and industry ministry over three years back, his reputation was that of a party loyalist and a loyalist of the Congress Party President. He is still renowned for his loyalty and closeness to Sonia Gandhi but he has carved a niche for himself. He has earned for himself a reputation as an effective spokesperson for the developing countries at the World Trade Organisation (WTO) and a tireless man behind the 'India everywhere' campaign that has contributed to the inflow of funds in India .

To some extent, Kamal Nath has been lucky. He took over at a time the world economy was booming and flushed with funds. But that is not to belittle his efforts. He has not waited for things to happen. But, for the leftist objections, he might have liberalised the policy for foreign investments even more.

His crusade at the WTO against the farm subsidies of the rich countries is easily the highlight of Nath's stint as commerce minister. He has maintained the pressure and only last week he seemed to be easing the pressure while conceding that the latest WTO proposal to cap the US farm subsidies between $11 billion and $16 billion can form the basis for further discussions. The results of his policies to forge bilateral agreements are, at best, uncertain.

Nath's policy for special economic zones (SEZs) is in disarray. But, he has not given up. His persuasive skills and proximity to Sonia Gandhi have enabled him keep the policy and push ahead. The focus of criticism has been on acquisition of the land of poor farmers by rich businessmen and builders. But, the real flaw in the policy is the captive SEZ of business houses that take all the tax breaks but create no infrastructure. Also, the reality of too many small SEZs will hurt the economy over a period of time.

The foreign trade policy that Nath announced in 2004 has its merits with its special focus on employment generating sectors especially in the rural areas. His package to help exporters cope with rising rupee vis-à-vis the US dollar shows his concern to keep exports growing.

Overall, Nath has done well and deserves recognition by an internationally renowned publication.

tncr@sify.com