Committee Report- India- Preferred Investment Destination | Current Affairs & Hindu Analysis: Daily, Weekly & Monthly - UPSC PDF Download

Introduction

The Parliamentary Committee commends the Government's proactive steps to attract investments and promote indigenous manufacturing. It expresses optimism that these initiatives will contribute to realizing the vision of 'Atmanirbhar Bharat' and positioning India as a global manufacturing hub. The Committee emphasizes the need for timely implementation of newly introduced schemes or measures.

In-depth Analysis

• India is swiftly gaining traction as a favored destination for foreign investments, evident from the record-high Foreign Direct Investment (FDI) inflow of USD 81.97 billion in 2020-21.
• The trends in India's FDI substantiate its appeal as a sought-after investment hotspot, as reported by Saudi Gazette.
• The government continuously evaluates the FDI policy, effecting significant alterations to sustain India's appeal as an investor-friendly destination.
• India's FDI policy is characterized by its liberal and transparent nature, with most sectors open to FDI under the automatic route. Recent reforms across multiple sectors such as Coal Mining, Contract Manufacturing, Digital Media, Single Brand Retail Trading, Civil Aviation, Defense, Insurance, and Telecom aim to further liberalize and simplify the FDI policy for enhancing ease of doing business and attracting investments.
• Several government initiatives have been launched to foster growth and entice investments, leading to India's rise in the World Bank's Ease of Doing Business (EODB) ranking from 142 in 2014 to 63rd place in the World Bank's Doing Business Report (DBR) 2020.
• India witnessed a 1.95 percent increase in its highest-ever foreign direct investment (FDI) in the Fiscal Year 2021-22. Notably, 'Singapore' emerged as the top investor country for FDI Equity inflow, accounting for 27 percent, followed by the US (18 percent) and Mauritius (16 percent).
• Computer Software and Hardware claimed the lion's share of FDI Equity inflow during FY 2021-22 at approximately 25 percent, followed by the services sector (12 percent) and the automobile industry (12 percent), as per a media portal.
• The manufacturing sector is experiencing a surge in global investors' interest, evident from the substantial 76 percent increase in FDI Equity inflow in FY 2021-22, rising to USD 21.34 billion from USD 12.09 billion in FY 2020-21.
• Karnataka emerged as the top recipient state, capturing 38 percent of the total FDI Equity inflow in FY 2021-22, followed by Maharashtra (26 percent) and Delhi (14 percent).

Rising Economic Influence

• Projections indicate a shift in the epicenter of global maritime trade from the Pacific to the Indian Ocean Region, with India and China anticipated to emerge as the world's largest manufacturing hubs by 2030.
• Enhanced connectivity to Central Asia and Europe through the International North-South Transport Corridor (INSTC) is expected to strengthen India's economic presence.
• Over the next five years, India is poised to exert greater economic influence across the Asia-Pacific Region.

Measures:

• The government's policy framework exhibits dynamic adaptability.
• States and union territories have undergone comprehensive reform exercises aimed at attracting investors. These reforms were initiated following consultations between the Department for Promotion of Industry and Internal Trade (DPIIT) and state governments through the Business Reforms Action Plan (BRAP).
• States and union territories are evaluated and ranked based on specific parameters considered post-implementation of reforms.
• An Empowered Group of Secretaries was formed to expedite investments in the country.
• The government has consistently relaxed policies, expanding the automatic list and reducing restrictions, facilitating ease of investment.
• Schemes like the production-linked incentive (PLI) scheme for electronics manufacturing, introduced in 2020, were aimed at enticing foreign investments.
• In 2019, amendments to the Central Government's FDI Policy 2017 allowed 100% FDI under the automatic route for coal mining activities.
• The Foreign Investment Facilitation Portal (FIFP) serves as the government's single-point online interface to assist investors in facilitating Foreign Direct Investment (FDI) and is managed by the Department for Promotion of Industry and Internal Trade under the Ministry of Commerce and Industry.

Conclusion

• Foreign Direct Investment (FDI) stands as a significant catalyst for economic growth and serves as a vital non-debt financial source for India's economic development.
• Ensuring a robust and accessible FDI regime is crucial. India's post-pandemic economic growth and its expansive market are expected to continue attracting investments geared towards market expansion in the country.