Kochi: The Confederation of Indian Industry (CII) president, Ashok Soota, on May 13 said the continuing violence in Gujarat would not affect the foreign direct investment (FDI).

However, if there was no improvement in the situation, Gujarat would lose the most favourable state status from potential investors, he told a press conference.

The country had shown "resilience" on the Gujarat issue and overall, the problem had been confined to Gujarat, he said.

Describing it as a "human tragedy", he said, the estimated losses due to the violence was approximately Rs 800 crore.

Approximately half of it was deferred demand. On the positive side, local industries had stated that their businesses had not been affected. If the situation was brought under control soon, long term investments would not suffer, he said.

Emphasising the importance of labour reforms, he said the Laws in India must reflect the changing economic scenario. A key factor in enhancing the competitiveness of India Inc, CII's theme for 2002-2003, labour market reforms pose one of the toughest challenges ahead. While reforms in other critical competitiveness enhancing areas like infrastructure, financial sector and taxation were moving ahead, any substantial progress was yet to be seen in Labour Law reforms, he added.

The Centre's decision to amend the Industrial Disputes Act, the Payment of Wages Act and Contract Labour Act were steps in the right direction. While amendments to the first two were yet to be introduced in Parliament, that of the Contract Labour Act had not yet been drafted, he said and expressed concern at the delay.

PTI