India has a large economy composed of agriculture (17.9%), industry (24.2%), and services (57.9%). While agriculture makes up a higher percentage of India's economy than world averages, industry and services are lower. Issues facing India's growth include anti-corruption efforts, liberalizing foreign direct investment, pursuing business climate reforms, and implementing major public works programs. Canada and India have been negotiating a Foreign Investment Promotion and Protection Agreement (FIPA) and broader trade agreement since 2007, but disagree on investor protections and dispute settlement mechanisms, delaying conclusion of these deals.
3. India Economy
According to CIA Fackbook sector wise
Indian GDP composition in 2014 are as
follows : Agriculture (17.9%), Industry
(24.2%) andproduct. India accounts for
7.68 percent of total Services (57.9%).
Total production of agriculture sector is
$366.92 billion. India is 2nd larger
producer of agriculture global
agricultural output. GDP of Industry
sector is $495.62 billion and world rank
is 12. In Services sector, India world rank
is 11 and GDP is $1185.79 billion.
Contribution of Agriculture sector in
Indian economy is much higher than
world's average (6.1%). Contribution of
Industry and Services sector is lower
than world's average 30.5% for Industry
sector and 63.5% for Services sector.
5. Issues facing India
• Anti-corruption efforts
• Liberalizing foreign direct investment (FDI) across-the-board
• Vigorously pursuing efforts to ease the cost of doing business
• Restoring stability and predictability in tax decisions, reflected in the settlement of the Minimum Alternate Tax
(MAT) imposed on foreign companies, and increasing substantially the limits beyond which the tax department
will file appeals;
• Implementing a major public investment program to strengthen the country’s infrastructure and make up for
the deficiency of private investment;
• Instituting a major crop insurance program to cushion farmers against adversity;
• Limiting farm interventions which had a first-order effect in moderating overall inflation;
• Elevating to mission mode the financial inclusion agenda via the Jan Dhan Yojana by creating bank accounts for
over 200 million people within months. Financial inclusion will also be furthered by the licensing of 11
payments banks and 10 small banks;
• Advancing the game-changing JAM (Jan Dhan Aadhaar Mobile) agenda. LPG witnessed the world’s largest direct
benefit transfer program, with about 151 million beneficiaries receiving a total of R29,000 crore in their bank
accounts. The infrastructure is being created for
extending the JAM agenda to other government programs and subsidies;
• Attempting to change social norms in a number of areas: open defecation, and voluntarism in giving up
subsidies.
9. Issues facing Canada and India
• FIPA
• In June 2007, India and Canada had said they concluded the FIPA talks. However, the FIPA is
yet to be ratified and made operational, the sources said. Later, India had decided against
signing new Bilateral Investment Treaties (BIT) till a model BIT text was in place. Though India
had recently brought out a model BIT text, the matter is yet to be taken forward with Canada.
However, the sources said since the Indian government had decided to accord sanctity to all
the BIT negotiations that went on till the freeze on signing new BITs, such a window could
help in expediting the signing of the Canada-India FIPA.
• It is learnt that Canada has differences with India regarding clauses in the proposed FIPA
including on the Investor-State Dispute Settlement (ISDS) mechanism.
• In case of any dispute, India wants investors to exhaust the domestic remedies before
approaching international tribunals. But Canada is worried about judicial delays in India and
wants flexibility to help investors approach international tribunals at the earliest. Also,
Canada wants India to ensure protection of investment commitments made based on existing
policies in case any roll-back / changes in those policies later hurt those investment plans.
• Trade Agreement
• FIPA agreement delayed Trade Negotiation