Report of the Joint Study Group on the Feasibility of India-Indonesia ...

33
- Potential subcontractors for assembling firms in <strong>the</strong> engineering goods industry from <strong>the</strong>
large pool <strong>of</strong> small- and medium-scale enterprises (SMEs);
- Strategic location between two continents (Asia and Australia) and two oceans (Indian
Ocean and <strong>the</strong> Pacific Ocean) and straddling one <strong>of</strong> <strong>the</strong> busiest waterways in <strong>the</strong> world, <strong>the</strong>
Straits <strong>of</strong> Malacca;
- Political stability and a democratically elected government, which has made Indonesia <strong>the</strong>
third-largest democracy in <strong>the</strong> world (after India and <strong>the</strong> US;
- Particularly for Indian investors, cultural affinity between India and Indonesia due to <strong>the</strong>
two thousand years <strong>of</strong> peaceful, cultural relations between India and <strong>the</strong> Indonesian
archipelago.
Indian investors are very welcome to invest in <strong>the</strong> following fields:
- Agribusiness, including soybean, corn, rubber, oil palm, cocoa, c<strong>of</strong>fee, tea, cashew nuts
and sugar cane;
- Fisheries, including marine and brackish water fisheries;
- Manufacturing industries, including processed food, textiles (in which Indian investors have
a strong competitive advantage), garments, wood products and furniture, pulp and paper,
chemicals and pharmaceuticals (in which Indian investors have a strong competitive
advantage), electronics (consumer electronics, <strong>of</strong>fice electronics, and electronic components,
and <strong>the</strong> automotive industry (motor vehicle assembly and auto parts).
- Infrastructure and power plants, toll roads, airports, sea ports, telecommunications, and
water plants;
- Services, including commerce, hotels and restaurants, warehouses, recreational and
entertainment services (Indonesian co-production in audio-visual sector) technical and
engineering services.
- Mining (a sector in which Indonesia has recently effected significant liberalization in its
regulations).
III. 3. Investment Regimes
III.3.1.India
Progressive reform measures undertaken since 1991, has resulted in more liberal and
transparent FDI policy in India, where up to 100 per cent foreign equity ownership is allowed
in most sectors/activities under <strong>the</strong> Automatic Route. In <strong>the</strong> limited number <strong>of</strong>
sectors/activities requiring prior Government approval, proposals for FDI are considered by