New Delhi: Foreign direct investment may be
hit, with India giving more market access to the south east Asian nations than it got in return from its free trade pact
with the ASEAN bloc, a study has said.
Bulk of Indian exports to the Association of Southeast
Asian Nations (ASEAN) were, in any case, going duty-free, as
the 10-nation bloc followed a free market policy.
"The effective additional market access that India has
secured out of the FTA with ASEAN is merely 14 per cent for
its exports to the region," the Assocham study said.
But India, which was not as open as the ASEAN bloc, would
have to open more in terms of duty reduction or even
elimination, it said, adding, these trade-centric economies
would get extra market for 75 percent of their exports.
This would also hit the FDI flows, it added.
"If market is thrown open to industries situated in the
ASEAN region, new investors may well prefer to set up
facilities there and supply the products to India," it said.
Once tariffs are reduced or eliminated, goods from ASEAN
would provide severe competition to domestic firms.
"These developments could impact capital inflows to
India...the ASEAN countries are more investment friendly with
their infrastructure," Assocham said. In fiscal 2008-09,
Indian FDI inflows aggregated to USD 27.3 billion.
The trade pact got opertionalised from January 1 with
government notifying the rules of origin with the biggest
three economies Singapore, Thailand and Malaysia.
The chamber pointed out that the process is too
cumbersome to woo FDI in FM radio and thus need not to be only
reviewed with single window clearance but also to be hiked to
a proposed limit of 49 percent.
Similarly, in Direct-to-Home Services, current ceiling of
FDI is 49 percent requires foreign investment proposal board
(FIPB) approval along with licence from the Information and
Broadcasting Ministry in consultation with Ministry of Home
Affairs and Department of Space, Assocham said.
Further, it said, the limit in cable networks should go
up to 74 percent from existing 49 per cent and that of their
share in uplinking a news and current affairs TV channel be
raised to 49 percent from current levels of 26 percent.
PTI
First Published: Sunday, January 03, 2010, 12:17