Stable policies, farm, labour law reforms key to PM Modi's bid to attract foreign capital

In a bid to attract long-term capital for infrastructure financing, Prime Minister Narendra Modi will soon hold a meeting with top 15 global fund houses to get their views on investment in infrastructure projects. There are fund houses around the world which are in touch with the government for investment in some good infrastructure assets which require patient capital, writes Krishnanand Tripathi, Deputy News Editor of ETV Bharat.

New Delhi:A stable policy regime, long-term commitment to major reforms, including recent changes in the labour and agriculture laws will be some of the achievements that Prime Minister Narendra Modi would like to showcase to foreign investors when he interacts with them as the country seeks to attract foreign investment for its capital-starved sectors like infrastructure, said two experts.

Addressing a virtual meeting organised by the industry body CII, economic affairs secretary Tarun Bajaj Wednesday announced that Prime Minister Narendra Modi would soon interact with the top 15 investment funds to attract foreign investment in the country.

Industry and financial sector experts welcomed the announcement as personal interaction with the Prime Minister would certainly assure these deep-pocket foreign investors and allay any apprehension that they might have about India’s growth story and the government’s commitment to reforms.

According to experts, the Prime Minister has a lot to offer and showcase to these investors.

“I think competitiveness is one important aspect, where Indian corporates were lagging behind, which has partly been settled by reducing the corporate tax rates. The other aspect is Ease of Doing Business, which I think has improved quite a bit over the course of the last few years. So there are a lot of steps in the right direction which are already happening,” said Upasna Bhardwaj, Senior Economist of Kotak Mahindra Bank.

In addition to major structural reforms that have been implemented during Prime Minister Narendra Modi’s first tenure such as a common nationwide goods and services tax (GST), Insolvency and Bankruptcy Code (IBC), PM Modi could also showcase the recent reforms like major changes in labour and industrial laws, and three new farm bills passed by the Parliament that grant more autonomy to farmers.

“The Prime Minister probably will be highlighting all the various reforms that have happened lately especially the difficult ones like the labour code, the industrial code, the farm sector bills that have been passed recently,” Bhardwaj told ETV Bharat.

“He probably will be reemphasising that despite all odds of the pandemic we have not lost sight of the need for structural reforms and that they will continue,” she added.

Predictable policy, timely resolution hold the key

In a recent interaction with industry and media, Principal Economic Advisor Sanjeev Sanyal described two issues as the biggest constraint in the country’s faster economic growth, poor enforcement of contracts and slow judicial process.

According to Vineet Rai, founder and chairman of Aavishkaar Group, foreign investors do not seek any special thing except a clear, consistent and predictable policy regime.

“In the fund business, basically the kind of money the government is seeking, these managers seek policy consistency,” Rai said.

Rai, whose Aavishkaar Group has assets worth $1 billion under its management, says these fund managers want an assurance that if they invest into a project then the government will not shut it down or will not bring retrospective taxes.

“They (foreign investors) don't want anything special, they want a consistent, predictable environment and then they want dispute resolution. They expect the government to be consistent on reforms and if it has promised anything then it cannot go back on its words,” Rai told ETVBharat.