Now a strict legal noose for urban Naxalites and Maoists

NEW DELHI: The Maharashtra Special Public Safety...

AAP leadership crisis may help BJP and Congress

NEW DELHI: The Aam Aadmi Party (AAP)...

Why PM Modi visited Austria after Russia

Several NATO member states are unhappy with...

India’s FDI rush: Past tense, present perfect

Nine Years of TransformationIndia’s FDI rush: Past tense, present perfect

India’s much envied tag of a “hot destination” in the context of its appeal as a country to do business with and invest in, has preferably less to do now with the lure of quick money parked in India for short gains which earned the nomenclature of “hot money” given the tendency of such funds to suddenly reverse direction in response to adverse market sentiments. India’s own “hot” flows in the new avatar are about the moolah rush by top investor countries of FDI equity inflow which have been poured in by MNCs which consider India an attractive investment destination and are planning expansion, buoyed by India’s optimistic growth prospects for foreign investments and potential to attract FDI flows of USD 475 billion in just the next 5 years.

The world’s fifth largest economy’s FDI inflows have increased 20 times from 2000-01 to 2021-22 despite the impact of the pandemic and geo-political developments on investment sentiment. According to the Department for Promotion of Industry and Internal Trade (DPIIT), India’s cumulative FDI inflow stood at USD 871.01 billion between April 2000-June 2022. From April 2021-March 2022, India had major FDI flows coming from Singapore at USD 15.87 billion, followed by the USA at USD 10.54 billion, Mauritius with USD 9.39 billion and the Netherlands with USD 4.62 billion. India’s computer software and hardware industry attracted the highest FDI equity inflow amounting to USD 14.46 billion, followed by the automobile industry at USD 6.99 billion, trading at USD 4.53 billion and construction activities at USD 3.37 billion.

This scenario is a far cry from India’s FDI inflows in financial year 2014-15 which stood at a modest USD 45.15 billion and increased to USD 60.22 billion in 2016-17 only to scale a consistently higher trajectory pushed by radical changes in India’s investment climate, including reforms to liberalise FDI rules and offer ease of doing business. 

The World Investment Report 2022 of UNCTAD places India as the seventh largest recipient of FDI in the top 20 host countries in 2021 despite a 30% decline in FDI to an estimated USD 45 billion as large mergers and acquisitions, especially in the digital technology space did not materialise. However, the government announced 108 new international project finance deals, demonstrating a significant rise in comparison to an annual average of 20 in the preceding 10 years. India also managed to capture almost half of all R&D investment in developing economies. Consequently, in FY22, as noted by the Economic Survey of 2023, India received the highest-ever FDI inflows of USD 84.8 billion including USD 7.1 billion FDI equity inflows in the services sector. Various measures have been undertaken by the Government to facilitate investment such as the launch of the National Single-Window system for approvals and clearances needed by investors and businesses, PM Gati Shakti, the National Bank for Financing Infrastructure and Development and the National Land Monetisation Corporation in March 2022 as a central agency to coordinate surplus land and fast-track implementation. Manoj Pant, Chair, Foreign Trade and Investment Committee, PHD Chamber supports the Production Linked Incentive (PLI) scheme as an enabler owing to its time bound nature and focus on key sectors of importance.

Companies support the sentiment. Toyota Kirloskar Motor (TKM) and Toyota Kirloskar Auto Parts (TKAP) are investing Rs 4,100 crore towards setting up of the new electrified component manufacturing line in Bidadi near Bengaluru with an annual installed capacity of 135,000 units. “We thank the Government of India for the announcement of SOPs for the auto sector PLI scheme which consists of simplified procedures with minimum paperwork as a standing testimony to realize “Ease of doing business. This reduces the burden on the applicant and helps to speed up the overall process of application and approval process,” says K.N. Prasad, Managing Director, Toyota Kirloskar Auto Parts.

In another big ticket investment move, Hyundai Motor India is putting in Rs 20,000 crore to build a sustainable ecosystem for electric mobility in Tamil Nadu, including a state-of-the-art battery pack assembly unit with annual capacity to assemble 1,78 000 units of batteries.

A consortium of European aerospace company Airbus and the Tata Group are setting up a manufacturing facility in Gujarat for C-295 medium transport plane for the IAF through a deal of over Rs 21,000 crore with Airbus Defence and Space, Spain to procure 56 C-295 aircraft to replace the ageing Avro-748 planes of the IAF.

- Advertisement -

Check out our other content

Check out other tags:

Most Popular Articles