The Hague, Nov. 9: Prime Minister Manmohan Singh today announced that his government's next budget would focus on tax reforms and bring down tariffs to Asean levels.
While successive finance ministers of India over the last decade had promised to bring down tariffs to Asean levels, Singh said his government would actually do so.
Addressing CEOs of European companies, Singh also announced that the government is planning to set up 'an independent and credible' petroleum regulatory authority to oversee foreign direct investment and pricing in the oil sector. A bill to this effect is likely to be introduced in the winter session of Parliament. An earlier bill had been allowed to lapse during the tenure of the previous government.
The Prime Minister underlined the importance of having a regulator by saying: 'I recognise that whoever comes to invest in India is entitled to expect a level playing field.'
Singh was responding to the chairman of Royal Dutch Shell, Jeroen van der Veer, who had suggested that to create a level playing field in the oil sector, India needed to set up a petroleum regulator.
'The government would do all it takes to integrate India into the evolving global economy,' Singh assured the European CEOs. He said India accepted all its obligations under the multilateral trading system.
The Prime Minister urged European companies to invest in India, saying: 'The future is here. I urge you to seize the opportunity.' The European companies at the meeting included Royal Dutch Shell, Alcatel, Hutchinson 3G Europe, Akzo Nobel, Rabo Bank, Royal P& Nedlloyd, SAP, Snamprogetti and Unilever, among others.
Singh sold India as a civilisation that has always respected the creators of wealth, saying: 'A society which respects those who create wealth is an achieving society.' He went to the extent of describing businessmen as 'the custodians of the possibilities of civilisation' and said they had a role to play in promoting multiculturalism and bringing societies together.
The Prime Minister urged the European CEOs to recognise the continuity and consensus in economic policy in India since 1991 when he as finance minister had taken a decision to embrace globalisation. The broad consensus on globalisation, he claimed, cut across parties and states of India.
'India in its totality accepts liberalisation and the logic of greater competition from abroad. We want to take full advantage of the opportunities of globalisation to wipe out poverty at home,' Singh declared.
The Prime Minister noted that both foreign and domestic investors saw lack of infrastructure, bureaucracy, corruption and the Indian tax system as constraints on stepping up investment. His government's next budget, he said, would focus on tax reforms.
Singh said India would adhere to all its commitments already made at the World Trade Organisation (WTO), including TRIPS (Trade Related aspects of Intellectual Property Rights). The pending legislation in this regard, he assured the CEOs, would be brought to Parliament soon.
He told them: 'India is not a mercantilist economy. The more we can export, the more we will import. We do not want to accumulate reserves for the sake of accumulating reserves. The more we earn, the more we will spend.'
Singh, however, expressed concern that at a time when India was accepting the logic of globalisation, the argument for protectionism was growing in the western world. He hoped that this trend would be reversed.
More specifically, the Prime Minister and members of a business delegation from Ficci flagged three areas of concern to India: nontariff barriers being imposed by European countries, excessive use of antidumping provisions against Indian exports, and restrictions on 'movement of natural persons' (i.e. professionals).