India is rapidly becoming a favorite country for foreign investment as the measures taken by the government led by Prime Minister Narendra Modi over the past eight years have paid off, as evidenced by the ever-increasing volumes of FDI that set new records.
FDI inflow to India reached its highest level ever at USD 81.97 billion in 2020-21. The information was given by the government during a parliamentary session. Among global investors, the government said, these FDI trends from India are an endorsement of its status as a preferred investment destination, Saudi Gazette reported.
The government regularly reviews the FDI policy and makes significant changes to it from time to time, to ensure that India remains an attractive and investor-friendly destination.
India’s FDI policy is liberal and transparent. Most sectors are open to FDI under the automatic route. In order to further liberalize and simplify FDI policy to facilitate doing business and attract investment, reforms have recently been undertaken in sectors such as coal mining, contract manufacturing, media digital, single-brand retail, civil aviation, defence, insurance and telecommunications.
The Minister of State at the Ministry of Trade and Industry, Som Prakash, informed in a written response to the Rajya Sabha (the country’s upper house in Parliament) that the country’s FDI under the current government led by Prime Minister Narendra Modi are at their highest level. never influx.
This came in response to a question posed by CPI(M) MP John Brittas and Loktantrik MP Janata Dal MV Shreyams Kumar. These MPs from Kerala questioned the government on the measures it has taken to attract global companies to the country.
MoS Prakash said in a written statement, “Various initiatives/programmes have been launched by the government to promote growth and attract investment in India.” He also pointed out that due to these initiatives, India jumped to 63rd place in the World Bank’s Ease of Doing Business assessment. [EODB] ranking according to the World Bank’s Doing Business (DBR) 2020 report from a rank of 142 in 2014.
The Minister also spoke of having launched a broad reform exercise in the states and union territories to attract investors. He said these reforms were launched after consultations between the Department for Promotion of Industry and Internal Trade (DPIIT) and state governments under the Trade Reform Action Plan (BRAP).
It should be noted that under this plan, all states and union territories are ranked on the basis of the reforms they have implemented. Some designated parameters are considered after ranking. “This exercise has helped improve the business environment in all states,” he said.
Speaking on other measures taken by the government to attract investors, Prakash listed a group of empowered secretaries who had been formed to expedite investment in the country. He also insisted on the establishment of Project Development Units (PDCs) to retain investors and stimulate sectoral and economic growth.
A GIS-enabled India Industrial Land Bank has been launched to help investors identify their preferred location to invest. The National Single Window System (NSWS) was also soft-launched in September 2021 to facilitate clearances for investors, he said.
According to data released by DPIIT, India’s highest ever foreign direct investment (FDI) grew by 1.95% year on year. In terms of top investing countries of equity FDI inflows, “Singapore” is at the top with 27%, followed by the United States (18%) and Mauritius (16%) for the financial year 2021-22.
The main sector benefiting from FDI equity inflows in FY 2021-22 was computer software and hardware. It came first with a share of about 25%, followed by the service sector (12%) and the automotive industry (12%), respectively, according to the media portal.
Interestingly, despite the COVID-induced pandemic, the inflow of FDI into the country in 2020-21 was USD 81.97 billion. Total FDI includes equity of unincorporated organizations, reinvested earnings and other capital.
The manufacturing sector is also booming, with global investors viewing India as a preferred destination. In a major boost for the economy, FDI inflows into manufacturing sectors increased by 76% in FY 2021-22 (USD 21.34 billion) compared to the previous FY 2020-21 ( US$12.09 billion).
FDI inflow increased by 23% post-COVID (March 2020 to March 2022: USD 171.84 billion) compared to reported pre-COVID FDI inflow (February 2018 to February 2020: 141.10 billion USD) in India. In the “Computer software and hardware” sector, the main recipient states of FDI equity inflows are Karnataka (53%), Delhi (17%) and Maharashtra (17%) during the financial year 2021- 22.
Karnataka is the top recipient state with 38% of total equity FDI inflow reported in FY 2021-22, followed by Maharashtra (26%) and Delhi (14%). Majority of Karnataka’s capital inflow was reported in ‘Software & Hardware’ (35%), Automotive (20%) and ‘Education’ (12%) sectors in FY 2021 -22.
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