The Hindu : Business : Investment Commission to facilitate FDI flows

Online edition of India's National Newspaper
Thursday, Oct 28, 2004

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Investment Commission to facilitate FDI flows

By Our Special Correspondent

NEW DELHI, OCT. 27. The Cabinet Committee on Economic Affairs (CCEA) today approved the proposal for the creation of an Investment Commission after the Prime Minister, Manmohan Singh, decided that it would be located in the Finance Ministry and would enjoy operational autonomy and Government support. Originally proposed in the budget by the Finance Minister, P. Chidambaram, the Commission will comprise one chairperson, two members and three professional groups and will initially have a three-year term.

While suggesting the creation of the Commission, Mr. Chidambaram had said it would solicit both foreign and domestic investments and act as a facilitation group between the potential investor and the official machinery.

Specific problems faced by the investors would be brought to the notice of the Government for speedy resolution so that investments in India rise significantly, Mr. Chidambaram had said.

The proposal cleared by the CCEA today mandates the Commission to seek meetings and visits with industrial groups in India and with large companies abroad, particularly in sectors where there is a dire need for investment. The Commission will also endeavour to secure a certain level of investment every year and its progress will be reviewed at the end of every quarter.

The Commission will also make recommendations to the Government on policy and procedures to facilitate greater foreign direct investment flows into India and all policy recommendations emerging from its recommendations will be brought before the CCEA for approval.

Turf war on jurisdiction

Though a budget proposal, the constitution of the Commission was held up because the Industry and Commerce Ministry wanted jurisdiction over it, more so because the Foreign Investment Promotion Board had been taken away from it and placed under the Finance Ministry by the Vajpayee Government.

However, the Finance Ministry wanted the Commission to function under its supervision as investment policies mostly originate from this Ministry. This turf war between the two Ministries had held up the formal clearance of the Commission till the Prime Minister finally decided on the jurisdictional aspect. With the path cleared for the constitution of the Investment Commission, the Union Cabinet also decided today to close down the Indian Investment Centre (IIC) and extend the voluntary retirement scheme (VRS) applicable to surplus Central government employees to the employees of IIC.

The scheme will be kept open for three months with effect from the date of offer to be issued by the IIC, after which action will be taken to dissolve the IIC. The VRS package to 74 officials of IIC is estimated to cost about Rs. 7 crores.

The IIC was established as an autonomous organisation in 1960 with the objective of doing promotional work abroad to attract foreign private investment into India and establishment of joint ventures, technical collaborations and third country ventures between Indian and foreign entrepreneurs. In addition to the head office in New Delhi, the IIC had offices in New York, London, Abu Dhabi, Frankfurt, Singapore and Tokyo.

However, during 1981 to 1990, the IIC was able to mobilise only about Rs. 1,275-crore investment, which led to the closure of its foreign offices in 1991 and 1992.

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