India must open up to FDI: Chidambaram

NEW DELHI:  India must open its economy up to foreign direct investment if it is to maintain blistering growth of nine per cent, the country's finance minister told the Financial Times on Tuesday.

P Chidambaram told the newspaper in an interview that sustaining an investment rate of close to 34-35 per cent of gross domestic product (GDP) would be key to maintaining growth and argued that foreign investors would not 'take over' the tightly-protected economy.

"This means we must keep the environment very enabling for investment, both domestic and foreign: ample liquidity, good flow of credit, opening up more sectors which are closed or too tightly regulated, opening up to foreign direct investment and looking for innovative financing, especially in infrastructure, where there's a hunger appetite for investment," he said.

Chidambaram said foreign investment in India was currently worth about nine billion dollars.

"In infrastructure alone, we need to get about 20 billion dollars to 24 billion dollars a year. So there is still a huge gap," he said.

"The fear that foreign investors are going to take over the economy is not justified at all. In terms of our GDP, the flow of investment into India is very small at about one percent of GDP," he said.

In January, global credit rating agency Moody's Investors Service said India's economy was unlikely to continue growing at over nine per cent due to its hefty fiscal deficit and creaky infrastructure.

India's economy grew by 9.1 per cent during the first half of the financial year to March 2007, making it the world's second-fastest growing after China.