Arun Jaitley hints at reforms in FDI regime

“Having opened most sectors for FDI, time has come to examine whether some of the conditionalities on which FDI investment is permitted, have become anachronic. We need to cut down on the number of permissions re-quired so that the time lag between the decision to invest and actual investment can be shortened significantly,” he said in a social media post.

The finance minister noted that states must realise that local laws which enable availability of land, environmental permissions, sanction of building plans need a relook. “Once an industrial zone or new township has been cleared for environmental sanctions, should individual structures require a separate environmental approval? Many countries have switched to an architect’s certificate as a substitute for building plans being sanctioned,” said Mr Jaitley.

He said that when an organisation compulsorily need a completion certificate for a building, the permission required for start of construction should be replaced by a regulatory mechanism. Mr Jaitley said that these additional changes will further improve India’s ranking for ease of doing business.

Not fully satisfied with 12 position jump in India’s ranking on ease of doing business index, Mr Jaitley said the World Bank has not factored in all steps taken by the government to improve business environment and ranking should have been “significantly higher”.

He noted that quicker decision making, faster policy changes, eliminating corruption at the top and smoother clearances have played a significant role. “The FIPB clearances and the environmental approvals are being routinely granted. Investors no longer queue up before the Mantralayas in Delhi lobbying for policy changes or approvals,” said Mr Jaitley.

He said that to adjudicate quickly upon investment related matters, a commercial division is being constituted in all High Courts. “This would improve the enforceability of contracts where India’s ranking is relatively poor,” he said.

The finance minister said that ease of opening business must also be accompanied by an ease in exiting. “For this, the framework of the Bankruptcy Law is being readied. Dispute resolutions with regard to public projects requires a quicker settlement mechanism. The same is being worked out,” said Mr Jaitley.

He said that much has been done to ensure that award of natural resources and public contracts are completely transparent. To empower public servants to take simpler and bolder decision, many corrections are required in some obsolete provisions of Prevention of Corruption Act, said Mr Jaitley.

“The same have already been introduced in Parliament. At a time when the world growth is moving slowly, India aspires to grow faster. To add a percentage or two in our present growth rate, the ease of doing business coupled with a simpler direct and indirect taxation system, a higher investment in infrastructure and irrigation will play a significant role,” said finance minister.