24 December , 2020 Fdiindia
FDI Growth Story To ''Go Well'' In 2021 Too
In the new year too, the high growth history of foreign direct investment in India will "go well" as there is an increasing concern among foreign investors in the country in the midst of the ongoing reform steps by the government to further improve the market environment.
Defense development will be among the fields that will be looked at for new overseas acquisitions in the months ahead with relaxed FDI requirements, though easing the enforcement pressure of companies will be a focus area.
According to Guruprasad Mohapatra, Secretary of the Department for the Promotion of Industry and Internal Trade (DPIIT), FDI in India reported a substantial leap, amid the global slowdown and the COVID-19 pandemic. During the January-September 2020 period, Facebook's big investment in the Jio Network of Mukesh Ambani helped India earn about USD 43.5 billion FDI and the bullish trend is expected to continue.
According to him, some large ticket investments will continue to take place as "overall there is an interest in Indiagrowth ''s story" particularly now that the worst part of the pandemic is over. Mohapatra said, after taking a number of measures to dramatically boost the ease of doing business, the government is now trying to reduce the pressure of business compliance.
"This is a priority of the government. Every compliance which is a burden needs to be removed and this includes de-criminalisation of civil wrongs," he emphasised.
India's ranking increased 14 positions to 63rd place among 190 economies in the Doing Business World Bank survey published last year. In the previous year, the nation was in 77th position.
The government has relaxed FDI requirements in coal mining, contract manufacturing, and single-brand retail trade, among other others. In areas such as AVGCC, the DPIIT is also looking at easing requirements (Animation, Visual Effects, Gaming and Comics).
Foreign direct investment equity inflows into India crossed the USD 500 billion milestone between April 2000 to September 2020, strengthening the country''s credentials as an investment destination.
About 29 per cent of the FDI came through the Mauritius route. It was followed by Singapore (21 per cent), the United States, the Netherlands, Japan (each 7 per cent) and the United Kingdom (6 per cent). The other big investors have been from Germany, Cyprus, France and Cayman Islands.
Since 2015-16, FDI inflows have been recording significant growth. In that fiscal, the country received FDI worth USD 40 billion, an increase of 35 per cent over the previous year.
In 2016-17, 2017-18, 2018-19 and 2019-20, FDI stood at USD 43.5 billion, USD 44.85 billion, USD 44.37 billion and USD 50 billion, respectively.
FDI is important because, in order to boost productivity, India will need massive investments in the coming years to revamp its infrastructure sector. The balance of payments and the value of the rupee are sustained through steady growth in foreign inflows.