The Union government is likely to come out with a liberalised foreign direct investment policy in a bid to make foreign investment an engine of growth and create large-scale employment.
"I would look into the policies and programmes (FDI) to give thrust to exports and manufacturing which would lead to greater job creation," Commerce and Industry Minister Kamal Nath said on Friday.
Any area where FDI leads to more investment and generates employment will be looked into and the approach of the government in those areas will be to have a liberalised FDI regime, he asserted.
Criticising the National Democratic Alliance government's policy on FDI, he said during the last five years, FDI has come in only as a displacement of Indian capital.
This did not create any economic activity or generate employment, he said adding, "My perception is very different. FDI should help growth. Liberal FDI policy should increase economic activity and generate employment".
Citing an example, he said 50 per cent of FDI flow in China was in export-oriented and employment-generating industries. Average annual FDI flow in China was over $50 billion and exports accounted for nearly 40 per cent of the GDP.
The minister declined to divulge details of the sectors where FDI would be further liberalised but indications are that small-scale sector could be one area where the present cap of 24 per cent could be reviewed.
Though there is stiff opposition to opening up the plantation sector to foreign direct investment, it could be an area, which could be looked into considering that agriculture accounted for over 60 per cent of the workforce in the country.
Kamal Nath said the government was undertaking a pilot project to establish a Business-to-Government portal to facilitate transactions. The pilot phase would target select services at some locations at central and state government levels.
Work on feasibility and development of the project has begun and offers are expected to be invited by October-November this year, he said.
Greater emphasis would be given to Special Economic Zones where the FDI policy permits up to 100 per cent FDI in all sectors except a few based on public health, safety and security considerations.
The policy initiatives would aim at making the country an attractive choice for export-oriented activities, he added.