Commerce Secretary Gopal Krishna Pillai speaks to Business Standard on the impact the Tata Motors decision to pull out of Singur will have on the investment climate in the state. Excerpts:
Don't you think that development will send a wrong signal to potential foreign investors?
Of course, they would. This is an unfortunate development. Investors abroad will think if a big company in India faces such hurdles, what will happen to us. But this is an isolated case.
I was in West Bengal a month back and there is a whole series of investments lined up. But investors waiting in the sidelines with their plans to come to India may have second thoughts because of this incident.
Do you see a decrease in the flow of investments to the state?
Personally, I feel, investments to West Bengal may get hit by up to 30 per cent.
What about the investment climate for the rest of the country?
Before investors pump in FDI, they take into account various factors. In the past few months, incidents like Singur, combined with the murder of a CEO in Noida as well as the serial bomb blasts in Delhi and other cities have dented investor confidence.
At the same time, there is a liquidity crunch abroad. Hence there may be an impact on inflows into India, but it will be limited. But we should remember that economic growth in India is not FDI-driven.
We are growing at 8 per cent and even if economic growth slows, it would be 7 per cent, which means that the fundamentals of the economy will continue to be strong.
But issues related to land have emerged as one of the biggest hurdles. What is your view on this?
One has to look at this with a perspective. For special economic zones, 50,000 hectares were acquired without any problem, and that too in the absence of policies related to Relief and Rehabilitation.
But we have to recognise that there are problems emerging related to land acquisition, and one reason is the relevant Act is very old.
The government is considering an amendment to the Land Acquisition Act and a new R & R policy.
The Parliamentary Standing Committee on Rural Development is going through these two measures. Parliament will discuss these two policy instruments in the next session.
The land owners of today are much more aware of their rights and value of their land than before. This is a good thing and the industry is also realising this.