Singh said his government was determined to continue the economic reforms to create a favourable investment environment and facilitate higher capital inflows and push the reform of both direct and indirect taxes with the aim of unifying indirect taxes into a single Goods and Services Tax in due course.
Addressing a business luncheon attended by top business leaders from India and Japan, he noted that India's growth, which fell to 6.5 per cent in 2008-09 because of the global economic recession, recovered to 7.4 per cent in 2009-10 and is projected to be 8.5 per cent in 2010-11.
He hoped that India will return to 9 per cent growth in 2011-12. "I am confident that strong fundamentals of the Indian economy will enable us to achieve our objective of double-digit growth in the coming decades," Singh said.
Underlining that he was not underestimating "many challenges" that are faced in achieving such high level of growth, he said "we need to close the infrastructure deficit, especially in the power, transport and communication sectors.
"This is a major constraint on our development and we will give high priority to infrastructure development in the years ahead."
Singh said that India's investment needs will be at least USD one trillion, part of which will come from within but "we expect Japanese companies to also provide their support."
He said during India's next five-year plan from 2012 to 2017 "we envisage financial outlays of over one trillion US dollars on infrastructure projects."
Private investment will play a large role in achieving this target, Singh said, while asking Japanese companies to play a much greater role in development of India's economy.
From India, Mukesh Ambani, Reliance Industries Chairman and Managing Director; Sunil Bharti Mittal, Bharti CMD; Fortis Chairman Malvinder Singh; and HDFC Chairman Deepak Parekh were among those present at the luncheon.
"India's investment needs in infrastructure will be at least one trillion US dollars during the next Five Year Plan. Part of the investment will come from within but we expect Japanese investments to provide substantial support to this," Singh said at the luncheon hosted by Nippon Keidanren, while asking Japanese firms to go beyond mergers and acquisitions.
He said that during the last three years, India has received cumulative Foreign Direct Investment worth over USD 100 billion. "We have seen a slow down in the recent months but I see that as temporary," the Prime Minister said.
Singh said most of India's investment is financed by domestic savings which has increased to 35 per cent of GDP. "I am confident that in the couple of years, it will rise to 40 per cent of GDP," he said, but added that India's domestic savings will have to be supplemented by foreign capital so that total domestic investment can be higher.
Reaching out to the business community of Japan, he said "today, more than ever before, India's buoyant economy, young population and large market combine well with Japan's technological prowess, manufacturing skills and financial resources to create a win-win situation."
"I strongly believe that we can and we must synergise our complementary strengths to impart momentum to Asian as well as global economic growth and prosperity," he emphasised.
He noted that India-Japan trade and investment had witnessed steady expansion in the recent years with the commerce making a "robust rebound" in 2010 and was expected to exceed USD 20 billion by 2012. "However, it is still at a low threshold, apart from being unbalanced, he said.
The Prime Minister said the Japanese FDI in India has grown substantially in the last three years, much because of mergers and acquisitions.
"We welcome greater Japanese involvement in (Indian) industry but I hope this will go beyond mergers and acquisitions to see Japanese Foreign Direct Investment creating new capacity in India's manufacturing sector. We also hope Japanese investment will engage in greenfield infrastructure projects as well," he said.
Singh said in the next 20 years, 40 per cent of India's population is expected to be in urban areas which will pose greater challenge of meeting the requirements in terms of services like transportation and water supply.
Japan has "unique capabilities" in this area and can join India in urban development, the Prime Minister said.
