India is one of the fastest-growing economies in the world. According to the Federation of Indian Chambers of Commerce and Industry (FICCI), India’s GDP is expected to grow at 9.1 percent in 2021-22. Despite the two waves of the pandemic, the growth outlook for India’s economy is highly optimistic. A major factor for this resilient growth is FDI in India.
Foreign direct investment (FDI) inflow is a significant contributor to any country’s progress. It is one of the best sources of funds for businesses and holds even more importance in a developing country like India. FDI powers the economic engine of a country with the added advantage of being a debt-free source of capital.
FDI equity inflow into India grew by 168% in the first quarter of FY 2021-22 (US$ 17.57 billion) as compared to the year before (US$6.56 billion).
MEASURES TAKEN BY THE GOVERNMENT
In a recent statement, Union Minister for Commerce and Industry Piyush Goyal announced that India has attracted record FDI inflows for the past seven years and expects to see the trend continue. This has been possible due to various investor-friendly initiatives by the government. Some of them are:
- Major FDI policy reforms in sectors such as defense, construction development, pensions, pharmaceutical and civil aviation.
- Launch of the ‘Make in India’ initiative to promote manufacturing in India with the help of foreign investment.
- Except for a few selected sectors, 100% FDI is allowed through the automatic route in areas like construction, automobile, food processing, etc.
For FY 2020-21, India received the highest ever FDI inflow of $81.72 billion, 10% higher than the previous fiscal (Source: Make in India).
As per the World Bank’s Ease of Doing Business Ranking for 2020, India jumped 79 positions from 142nd (2014) to 63rd (2019), spotlighting India as a favorable destination for investment.
ADVANTAGES OF FDI INFLOW INTO INDIA
A lot of merits come with the influx of foreign capital into a country’s economy. A few ways it elevates a country’s standard of living are
- It generates more employment opportunities: With increased capital, setting up industries becomes easier. As a direct consequence, more employment opportunities arise and give way to a better quality of life for the unemployed populace of a country.
- Increase in exports: As the production capacity of a country increases due to the setting up of more industries, it becomes possible for the nation to export its products and services to other countries.
- Access to new technologies: When foreign investors use a country’s resources and labor for their industry, they provide the host country with the latest technologies and methods for production.
- Capital flow to core sectors: FDI can be used to provide the necessary boost to the core industrial sectors of a country.
- A Higher standard of living: Foreign investment results in the manufacturing of modern products and services, which helps increase the standard of living of the people, especially those living in backward sections of the society.
FDI India acts as a connector between the companies seeking investment and the foreign investors looking to invest in India. You will get complete assistance in securing foreign investment in your business regarding project planning, connecting with investors, financial aid and government approval.
We facilitate the process for FDI in India and will be your guide on your journey to an ever-expanding prosperous business.