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Last Updated: Monday, 12 July, 2004, 09:07 GMT 10:07 UK
India's communists vow opposition
Indian communists
The communists do not want more foreign investment
India's communist parties have vowed to fight government plans to increase the level of foreign investment allowed in the country's economy.

The Congress Party-led administration relies upon the four left-wing groups to maintain its majority in parliament.

While the communists say they do not want to pull down the government, they have pledged their strong opposition and called the plan unwarranted.

Analysts ruled out any immediate threat to the two-month-old coalition.

"This is predictable but I don't think that at this point in time it will snowball into a crisis," said V Anantha Nageswaran, regional head of investment consulting at Credit Suisse Financial Services in Singapore.

Political footwork

The planned rise in overseas investment was announced as part of the 2004/2005 budget.

The government proposes raising foreign direct investment limits in the telecoms sector to 74% from 49%, and in insurance and aviation to 49% from 26% and 40%, respectively.

Raising the foreign investment ceiling in telecoms is like handing over Indian companies to foreigners
Communist leader D Raja

"We are genuinely concerned with the hike in foreign investment limits," D Raja, national secretary of the Communist Party of India, told Reuters on Monday.

"Raising the foreign investment ceiling in telecoms is like handing over Indian companies to foreigners."

Mr Raja said the communist party leaders would be meeting Mr Singh and finance minister Palaniappan Chidambaram to register their protest.

But Mr Chidambaram, speaking on Monday at a Federation of Indian Chambers of Commerce & Industry event, said the increase in foreign ownership limits would have no practical result since it was only formalising the current reality.

"Telecom has 74% (foreign investment) already... only it is in a non-transparent manner," he said.

"All that we are doing is making transparent what is non-transparent."

Reform history

Mr Chidambaram added: "If you see the details of the holding company it is a maze of lines that reads like the succession lines of a Hindu undivided family."

India's prime minister Manmohan Singh started India's free-market reforms as finance minister in 1991 and is committed to carrying them forward.

While his government currently depends upon the support of the communists, some commentators say it could now alternatively seek - and win - support for its foreign investment bill from the main opposition group Bharatiya Janata Party.




SEE ALSO:
Markets cool to new Indian budget
09 Jul 04  |  South Asia
India's please-all budget
08 Jul 04  |  South Asia
India's economy 'to grow by 8%'
09 Feb 04  |  Business
Reforming India's maddening tax system
05 Jul 04  |  South Asia


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