Mid-tech FDI for job creation need of the hour

Panel stresses the need to keep import tariffs low and stable; says private sector required to create jobs as mentioned in Budget

- SHIKHA CHATURVEDI & SHIVA RAJORA

India needs to focus on attracting mid-tech foreign direct investment (FDI) for job creation as all large economies are focusing on hi-tech FDI, and they have enough resources to allow them to provide subsidies, leading economists concurred on Wednesday in a panel discussion at the Business Standard post-Budget summit in Mumbai.

The panel consisted of JP Morgan Chief India Economist Sajjid Z Chinoy, Citigroup India Chief Economist Samiran Chakraborty, HSBC Chief India Economist Pranjul Bhandari, and YES Bank Chief Economist Indranil Pan.

In response to a question on whether the government has taken an appropriate approach in prioritising job creation as a major macroeconomic objective, Bhandari said in order to take advantage of the alignment of the global value chains, India needed to move towards to mid-tech FDI over the medium term in sectors such as textiles, toys, handbags, and small electrical equipment.

"Twenty-five to 30 per cent of global capital last year went to the United States (US) in hi-tech, which the US has been subsiding for the past few years. In order to focus on midtech, we need policy certainty and low and stable import tariffs, and announce publicly we will keep our import tariffs stable over the medium term," she added.

She added India needed to sign "deep" free-trade agreements (FTAs), particularly with large countries and trading blocs, and simplify norms under programmes such as the productionlinked incentive (PLI) scheme.

Besides, she concurred with the assessment that the private sector needed to create jobs as stressed by the Union Budget.

"The job-creation challenge is so large that all have to do their bit. Eighty per cent of investment is done by the private sector. In a way, they are the ones who need to create jobs and I am not surprised the role of the private sector was discussed in this Budget as well," she added.