Europe needs to engage itself more with India: FM

New Delhi, June 27 (UNI) Finance Minister P Chidambaram today told an audience of European business community that the long journey of India's economic reforms has its hallmark gradualism, but gave a categorical assurance that there will be no reversals along the path.

"There will be no U-turns or undesirable shock", Mr Chidambaram said in his address at the 'India- Europe Investment Forum' in London. The Minister's speech was made available here.

The Finance Minister dwelt at length on the advantages of doing business with India. The economy had clocked an annual average growth rate of 8.6 per cent; a resurgent industrial sector and continued dynamism of the services sector characterise the Indian economy; India's aspiring middle class is growing in size and driving demand; investment to GDP ratio stands at a high of 35.1 per cent, and the government was continuously endeavouring to improve the investment climate.

Besides, Mr Chidambaram said, the country has emerged as a major destination for global portfolio equity flows and more and more Indian companies were getting listed on world's stock exchanges.

Mr Chidambaram said the gradualist approach to reforms was likely to continue in the realm of capital account of the balance of payments. However, India's trade openness was already higher than in some of the advanced economies, he said.

"While remaining committed to integration with the global economy, India has followed a gradualist approach to opening up to capital flows. It differentiates among various players", he said.

The Finance Minister noted that the European Union was India's largest source of FDI. EU has accounted for 25.3 per cent of total FDI inflows between August 1991 and December 2006. The investment has been mostly in the power, telecommunications and transport sectors.

"However, I should also note that in the list of EUs preferred FDI destinations, India's rank was an unsatisfactory 18, and India receives only 0.3 per cent of the EU's world-wide investments. As a country that actively seeks foreign investment, I acknowledge that the onus is upon India, and its political and business leaders to communicate the India opportunity to the rest of the world." "I believe that there is large scope for expanding the flow of FDI from Europe to India," Mr Chidambaram said.

The Finance Minister said the two-way interaction between India and the world in terms of globalisation was here to stay. "We continue to harness the globalisation process to suit our requirements and attempt to convert the challenges into opportunities." "The India growth story is a real life story unfolding before our eyes. For Indians, it is a huge challenge. For Europe. it is a huge opportunity. For the world as a whole. it is an exciting prospect that India will finally succeed in eliminating poverty and joining the ranks of the developed countries of the world," Mr Chidambaram said.

"When, I repeat when, not if, India succeeds, no one will be a loser and all of us will be winners. I hope Europe will respond to the India opportunity and more fully engage India in the months and years to come further", Mr Chidambaram said.

UNI