Industry minister Maran sends mixed signals to investors

Vol 3, PW 20 (27 Oct 99) People & Policy

Indias new Minister of Industry Murasoli Maran will have disappointed foreign investors with some of his first comments on assuming power.

Maran said foreign investors with joint ventures in India would continue to require a No Objection Certificate (NOC) from their Indian partner before permission is granted to set up a 100% fully owned Indian subsidiary. "If there are no restrictions on multinationals then Indian industry will die", said Maran, "It will become difficult for domestic industry to survive if wholly-owned subsidiaries crop up without checks." Such a statement from a man widely seen as one of the most able and reformist ministers in the government should be taken as a warning.

Despite outward signs of welcome towards foreign investors, Marans free market reputation is tempered by a clear bias for Indian companies over multinationals. Maran adds that he wants to see Foreign Direct Investment (FDI) in India rise to $50bn a year against the present level of $2-3bn unaware that his two statements are contradictory: a continued requirement to obtain an NOC - and the obvious potential of blackmail by Indian companies of their foreign joint venture partners - will if anything deter inflows of FDI, not encourage it.

That aside, Marans wider goal of cutting Red Tape to ease the pain of foreign investment appears genuine enough. "Foreign investors are not for hurdles and a series of clearances", he said, "They want a one-stop permit rather than to spend months finding ways to bring in money."