FDI: party may see red but Buddhadeb needs his red carpet

The CII takes a delegation of about 100 Chinese businessmen to Kolkata on August 6. Bhattacharjee is keen to meet them, too, probably exchange notes with them on how they are dealing with the FDI issue. The Chinese delegation is led by the Vice Governor (Indian equivalent of Chief Minister) of the Yunan province.

While the Chief Minister speaks, his bureaucrats will quietly assess the response of Western ambassadors in the audience. For, they are not coy of admitting one fact: if it is anything they need, it is foreign investment in several sectors: from information technology to food processing, retail and real estate to tourism, minerals and metals, engineering and chemicals.

There has been practically no FDI in industry in the state after Mitsubishi Chemical Corporation set up its plant to make purified terephthalic acid (PTA), a raw material for the synthetic textiles industry, four years ago for Rs 1,600 crore. The Mitsubishi plant is thriving—it has completed one expansion and has been able to declare dividends.

FDI still eludes West Bengal, and the state is far from becoming a business destination in the way that rival states like Karnataka, Maharashtra, Tamil Nadu and Andhra Pradesh have become.

This is Bhattacharjee’s third such roadshow in the past one year. The Bengal team has already travelled to Hyderabad and Mumbai. In Mumbai, Bhattacharjee invited questions and then on the sidelines had a one-to-one with Ratan Tata, Adi Godrej, Hemendra Kothari (DSP Merryl Lynch) and Ajay Piramal.

In sharp contrast to the ideological ruckus in his party in Delhi over FDI, the state government is rolling out the red carpet to several foreign delegations. Take these examples from this year alone:

• B Steinruecke, director general of the Indo-German Chamber of Commerce, inaugurated a toy park. The CM hoped Chinese toymakers could be brought in for investments.

• French team headed by Nicole Fontaine, minister for industry, power and IT. She acknowledged that her visit was prompted by an “improved perception” in France about West Bengal.

• The Italians followed, sending a team headed by the economy minister of Tuscany province, Ambrogio Brenna. The Italians were reportedly keen to invest in handicrafts, food processing, education and leather products.

• Last week, two consortia linked to the Singapore government were here to seal deals for consultancy services.

• Indonesian and Singaporean delegations have also turned up while an important Chinese visit is slated for the first week of August.

But why does FDI avoid Bengal? There is no clear answer.

An official of the British Deputy High Commission in Kolkata admitted that FDI flow in Bengal has been limited mainly because of the state’s ‘‘perception’’ problem.

The CII’s latest “Business Perception Survey on West Bengal” shows that, in terms of current investment friendliness index (CIFI), the state comes sixth after Maharastra, Karnataka, Tamil Nadu, Gujarat and Andhra Pradesh.

For the domestic industry—and this would be true for foreign investors as well—infrastructure is identified as the most constraining factor. Next comes labour.

Again, 51 per cent felt that poor roads were the greatest constraint in infrastructure followed by power (18 per cent), lack of port facility (15 per cent), lifestyle related or social infrastructure (eight per cent) and lack of connectivity (eight per cent).