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Home > Business > Business Headline > Report

FDI woes? Blame it on infrastructure

November 29, 2005 21:02 IST

A leading international human resource expert on Tuesday warned that foreign companies could soon be put off by the 'delays' in infrastructure development in India, affecting FDI inflow into the country.

"A major issue of concern among the foreign companies is whether governments in India can meet their infrastructure commitments. Global CEOs don't trust India anymore as commitments are not being met," Manpower, USA, executive board member David Arkless said at the India Economic Summit 2005.

Placing India in the 'danger zone' in terms of global companies beginning to lose interest in the country, he said the escalation in pay rates of the workforce was proving to be another deterrent for them.

"Some jobs, such as consultancy and domain jobs, in India are now costing as much as in London, Paris, Rome or New York," Arkless said.

Another issue, he said, was the shortage of skilled workforce. "India will have to work really hard in the next five to 10 years to create a pool of talented workforce, or it may be left behind in the global competition," he said.

He was speaking in the session entitled 'India's Talent Pyramid: Time to Rebuild.'

Meanwhile, Indian industry is crying foul over supply of free power by some states and the huge continuing transmission and distribution losses which have made a mockery of power sector reforms, saying that this has deterred foreign investors from coming to India.

But a vehement power secretary R V Shahi denies that free power was a policy of the Central government.

"As much as 90 per cent of the revenue for the power sector is derived from 123 urban centres," the leaders of the power industry said participating in a session at the 'India Economic Summit 2005.'

The event has been jointly organised by the World Economic Forum and CII. The theme of the session was 'Infrastructure; so who is building the growth highway.' "Foreign investors in the power sector, with no Indian partners, have trouble getting accustomed to the system," they said.

Industry identified infrastructure as the biggest obstacle to economic growth and stressed the need to spend a higher percentage of GDP for the development of physical infrastructure, specially the power sector.

"The hydro-power sector has potential but licensing and environmental issues are not being addressed," Gujarat NRE Coke vice chairman and managing director Arun Kumar Jagatramka said, "The industry identified lack of proper systems in the areas of power distribution, reliability and open access as being responsible for the lack of investments in the power sector."

Power secretary R V Shahi said that the Electricity Act 2003 provides huge scope with no requirement now for a license or techno-economic clearance for power generation. Legislative and policy frameworks were in place with federal and state issues being addressed.

He said: power trading had led to balancing idle capacities and deficits. Hydro power development was being encouraged through various government schemes, he added.

Additional inputs: UNI

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