Union Finance Minister Nirmala Sitharaman has stressed that nothing stops the private sector from coming and doing business in India, noting that there are many non-Indian private insurance companies that are already operating in India.

In her remarks during a fireside conversation with CSIS President and CEO John J Hamre on ‘India’s Economic Aspirations’ on governance reforms of MDBs, global disruptions shaping policy choices, climate policy, financial services, and the Indian economy, in Washington, DC on Friday, Sitharaman recalled that Indian government in its 2021 budget clearly mentioned that there are four areas where government will be present. However, it did not mention any area where the private sector cannot come in.

Being asked about prospects for the private sector who would love to do more in the banking and insurance sectors in India, the Finance Minister said, “Nothing stops them from coming and doing business. There are actually a lot of private Banks already in India. Private insurance companies already in India. Private insurance companies which are not Indian, which are already in India.”

“So, private Banks which are not in India, Standard Chartered, one of the biggest ones has more than 100 branches in India. So, nothing stops them and it’s not a hazy thing saying all right you’re saying that nothing stops them but does it have a backing somewhere is it a policy is it written somewhere,” she added.

The Finance Minister further said that there is no sector in which the private sector cannot work in India.

“Yes it is written somewhere 2021 budget under Prime Minister Modi clearly said there are only four areas in which the government will also be present. There is no area in which the private sector cannot come in. India has actually opened up every sector that I why even in a sector which is very sensitive to defence production a sector which is very sensitive, space, today you have private operations. So, there is no sector in India and I’ll be very proud to say this India suffered for first of all India has a lot of entrepreneurs it’s always had small medium entrepreneurs some large entrepreneurs,” she added.

Sitharaman recalled India always having large corporations even during the Colonial British rule. She stated that the situation changed in India due to socialism and even spoke about “license quota raj.”

Highlighting the change in how businesses started operating in India due to socialism, Sitharaman said, “Even during a repressive Colonial British rule, you had Indian large corporations somehow managing to survive and do business and grow. India has always been entreprenuary, some big, some medium, some small. But, I’m getting into a politically sensitive bit but I will still say it. Much more than even during the British period because of the socialism that we had taken over pretentiously.”

“I would think it doesn’t sort the Indian temperament and having taken it up my God the way in which we had controlled our businesses, regulated our businesses, license quota raj is a language that we use even…What is it you give them license you give them license only if you like them or you put a thousand conditions to give them license? Quota you can only produce this much and not beyond. I mean come on he’s coming to produce you want it all and more and you want to tell him no no you can only produce this much, typical socialism,” she added.

She stated that it was Prime Minister Narendra Modi who said “No red tape but only red carpet for business.”

Sitharaman stated that the term ‘corruption’ has not been heard in the government after the PM Modi-led government came to power in 2014.

Stressing the change in India’s policy under the PM Modi-led government, Union Finance Minister said, “Raj permit Raj, you will all allow him or you will not so the beautiful package of the socialism which appealed to the to everybody…we don’t want profit making big

corporations. India ended up undermining its own capacities and not till Prime Minister Modi could anyone say in order to promote businesses we’ll invite businesses to India.”

“We’ll invite Indian businesses also to be bold and taking risk and we will give them a red carpet. In fact, it was Prime Minister Modi who said no red tape but only red carpet for business because we were full of corruption and post 2014 and till today let me challenge anyone who’s heard any word of corruption in the government that is how transformational changes were brought in to remove that socialism which did not do good to anyone,” she added.

Criticising the policies of past governments, Sitharaman said that it was only in the 2021 Budget that privatization was mentioned without any hesitation.

“If per socialism you benefited the poor I’m willing to stand up and say probably it was right. India’s poverty elimination rate was so pathetic so socialism didn’t help them but it helped some rent-seeking people that businesses didn’t grow. So, it took the 2021 budget to use the word privatization without hesitation or batting an eyelid what’s wrong 2021 budget said it that we open up all sectors for private sector to come in, government will be there in strategic important areas because a telecom company will not go to the borders to provide telephone connection, we need a government company to do it. So, we will be there. We are not saying government will not be there at all but it will be there strategic sectors. So, yes we’ve opened it up for private. So, banks, insurance everybody is coming in there’s no hesitation,” she added.

Earlier in September, the Ministry of Finance notified the new Foreign Exchange (Compounding Proceedings) Rules 2024 to simplify rules and regulations for foreign investments. The new rules are aimed at streamlining and rationalising existing rules and regulations to further facilitate ease of doing business.

“As part of a broader initiative to streamline and rationalise existing rules and regulations to further facilitate ease of doing business, the compounding proceeding rules were comprehensively reviewed in consultation with the Reserve Bank of India,” the Finance Ministry said in a statement.

The new rule will replace the existing Foreign Exchange (Compounding Proceedings) Rules 2000. The ministry said that the government is emphasising simplifying the provisions to expedite and streamline the processing of compounding applications.