Remove bureaucratic hurdles hindering FI, say Europeans

Press Trust of India

New Delhi, June 26:

Buoyed by the rapid growth of the Indian economy, European Union (EU) has decided to upgrade economic cooperation with it at par with China but wanted New Delhi remove bureaucratic hurdles hindering flow of foreign investment.

“India is very fast growing economy. India is at the top of the list,” senior EU officials said adding the country was now as important as China for trade and economic relations. India is not only having increased growth but a few countries maintain such high growth, the officials told visiting Indian journalists.

“Earlier, India was important in our economic relations, but China was more important,” they

said adding “this has changed. India is now as important as China in devleloping trade and economic relations.”

There has been general reduction in tariff and UPA government has promised to bring them down further to the ASEAN level, they said emphasising the far-reaching tax reforms in the budget and introduction of VAT in states have improve the economic environment.

“The economic reforms are moving. The Licence Raj is being gradually taken away. System of handling companies with heavy handedness is gradually disappearing,” they said praising the government for persuing reforms despite the compulsions of coalition politics.

EU, however, underlined the need for huge investments in technology and infrastructure saying non-availability of power was seen by European companies as a major bottleneck in attracting investments, the official said. If India wants to attract large investments particularly in the infrastructure, they said there was need to remove red tape in bureaucracy.

“The elements of reforms have not so far percolated down,” the official said stressing FDI policy needed to be further liberalised in telecom sector.

Telecom has been one of the most dynamic market in India but what is regrettable is that it has taken 15 years since reforms started to reach the present level. “Pace is a problem in India,” the officials said, “There was a large amount of unpredictablilty. But now the government is positive. India is now a country with enormous potential. There is some predictability in the direction of the economy,” they added.

The officials said there was a perception that European Union was more interested in expanding its internal markets after the enlargement of EU, with the East European countries becoming its members.

EU is still the largest importer of goods and services and it was still India’s largest trading partner, they said adding the 15-nation bloc, however, wanted India to reduce high tariffs in some of the sectors like textiles to allow imports from Europe.

Wines and spirits have tremendous scope but high tariff of 200-500 per cent in India was denying access, the officials said adding distribution, retail and legal services should

be opened up.