Dynamics of Investment Liberalisation in India: Looking through a Gender Lens

1. Dynamics of Investment Liberalisation in India: Looking through a Gender Lens Ranja Sengupta Third World Network 'The Politics and Economics of FDI through a Gender Lens' Gender and Economic Policy (GEP) Discussion Forum ISST-HBF 9th April, 2013, New Delhi

2. FDI and Development Foreign Direct Investment, increasingly important, preferred to short term capital flows. • Positive impacts: • Conduit for transfer of technology and human skills • New ideas and innovation • Sources of capital, growth and employment: if addition to stock • Catalyst for development (when right linkages are present in sufficient amount) • Value added/product upgrading and diversification of production and export base • Crowding in of domestic investment • Pay higher wages than comparable local firms

3. FDI and Development • Concerns: • Restrictive business practices of TNCs (advere transfer of technology agreement between affiliate and parent co) • distortive effect of transfer pricing (to avoid tax obligations) on government budgeting • Crowding out domestic investment • Negative impact of foreign affiliates on SMEs • FDI in lab intensive segments can push out workers. • Inequalising: does not often go to backward areas

4. FDI and Development: Global Experience Overall • Some analysts say (e.g. Braunstein) no clear link between FDI and development esp. in long run • Policy context is very important. Conditions on FDI (e.g. labour content, or in which sectors)+ domestic policy environment. Example: Labour laws, social protection, govt. provision of essential services,

5. Gender and FDI: Experience and Issues • In semi-industrialised countries, benefit in employment for women from FDI • In developing countries, as industries move up value chain, effect is less positive • High share of female employment in TNCs particularly for export intensive assembly and manufacturing • However, there are often issues about the quality of employment (wages, the working conditions, contribution to knowledge and skill upgrade) of male and female workers and managers. Ex: Bangladesh. Mexican Maquiladoras. • Impact on wages, work conditions may not be sustained in the long run

6. Gender and FDI: Experience and issues • Employment decline in agr, increase in manu + services • But women often limited to low skill segments. • SMEs and women entrepreneurs? Does FDI drive out SMEs? • FDI in natural resources including land: women are linked closely • FDI in services: Employment and access. Latter very important for long term opportunities for women. Each reinforces the other’s impact.

7. India: Framework of Investment Liberalisation • Autonomous (automatic/approval route, FDI caps, PRs) • WTO : TRIMS with limited scope, invt under Singapore Issues • Bilateral Investment Treaties (BITs)/ Bilateral Investment Promotion Agreements (BIPAs) (mainly about protection) • Free Trade Agreements: CEPA, CECA, BTIA etc with investment chapter (market access +protection) • India received 30824 mln USD (2012-13)

8. India: FDI and Gender • Agriculture and food access: mechanisation in threshing, …. • Services: Employment + Access • Receives highest share of FDI: 58% of total (Apr 00 to July 09), 53% (2000-2013 Jan) • Employment impact positive in many areas where women predominate; tourism, health, education • But several concern areas as well • Construction • Retail • Health • Banking

10. Construction: Employment • 13.6% of workers are women, 4.4% of urban female employment, • Accounts for 38.9% of unorganised female casual non-agr workers • India receives 12% of total FDI inflows in construction, is already rel.ly open, • Mechanisation has already replaced labour • Women are evicted first (Jhabvala) • Empl. Growth: 99-00: male 4.87%, fem. 1.35%, fell from 93/94-99-00

11. Retail: Employment • Accounts for 9.5% of urban women’s total employment (in rural low) • 16.63% of urban women’s services employment (2004-05), 25.8% of rural women’s services employment. • Small family run shops, women can combine with HH activities • Street vending • Informal sector

12. Women already feeling pressure: Retail contributed 22.85% in employ 1999-00 (urban), fell to 16.63% in 2004, smaller fall in ruralWomen’s share in total retail employment also fell from 11.25% to 9.47% (urban), smaller fall in rural (gr. In abs employ in rural)Reason: corporate retail, traffic, restrictions on street vending, credit

13. Health: Access • Mode 3: Investment • Employment for nurses , health professionals can go up. Can also be increase in access but for whom? • Adds to the Private vs public facilities debate: our vulnerable need pub not priv (25% of health exp is public in India.) • User costs can go up • Private facilities crowd out pub. facilities/FDI crowds out dom inv • More exp relatively for women, esp. in rural areas, will act as a deterrent • FDI not in rural areas • Impact on care work? + if increased access, - ve if not.

15. Banking: Access • Foreign banks in India: Comparatively higher proportion of women account holders (23.8%) but disbursement lowest compared to all others (only 7.9%). • Comparatively RRBs do much better: 25.5% of accounts, 19.6% of credit to women • Foreign Banks also avoid risk: No lending in rural areas • In fact only metros within urban. 81.4% in merop. And 17.9% to other urban • Urban lending to women: 24.4% of total lending to women and 21.1% of women borrowers • No-frills account (only 0.13% of total) by foreign banks(March, 2009)

17. Performance Requirements, Regulation, Policy Space • PRs getting increasingly diluted • Constraints on Domestic Policy Space: Investors’ Rights sacrosanct, acts as deterrence for policy. Tax laws, health, environment Examples: • Land and natural resources: the majority of the 25 known outstanding investor-state cases under U.S. FTAs and BITs (totaling $11 billion in claims) relate to natural resource policies. Nearly half of the 129 cases pending before the World Bank’s investment dispute facility relate to natural resources. (Burlington Resources vs Ecuador, pending, reveals conflicts between government duties to protect human and indigenous rights, on the one hand, and obligations to protect foreign investors) • Health: Rencovs Peru: Lead poisoning of 162 La Oroyan children (US-Peru FTA). Renco (Doe run) sues Peru for 800 mln USD. • Wherever regulation is not mature/incomplete: could become problematic. e.g. Medical Tourism and domestic regulation: surrogacy etc. • FDI can work for gender equity only if we can tweak it to specific needs and provide supporting policy