Fri. Mar 29th, 2024
picture credits- jagran josh

Since 2015-16, FDI (Foreign Direct Investment) in India has recorded a significant high growth. The Commerce and Industry Ministry reported that India received its highest-ever Foreign Direct Investment (FDI) in April-August 2020, the first five months of the financial year.

This boundless growth story of India will continue strong in the current fiscal year 2021. As reported, FDI in India increased by a hefty 16% year-on-year to $27.1 billion during the arduous COVID-19 period of April-August. Moreover, it has been further informed by the ministry that the total inflow of Foreign Direct Investment (FDI) in India in the first 5 months amounts to $35.73 billion which 13% higher compared to the same period, last year.

Well, this FDI growth story has its certain reasons. It has been stated by The Commerce and Industry Ministry that the increased FDI inflows in India are because of the stringent growth steps and measures taken by the central government in the last six years, in the pursuit to make India a protected environment for investment and provide ease of doing business to the foreign investors. Its success can also be attributed to the measure by the government to ease the norms of doing business in India at the backdrop of firms that left china, choosing Vietnam over India.

More emphatically and put together, The FDI policy reforms of ease of doing business and investment facilitation resulted in increased FDI inflows in the country. The current trend in the FDI policy of India proves India’s commitment for endorsement of its status as a preferred investment destination amongst various competitive global investors.

In world bank’s Ease Of Doing business ranking released last year, India’s ranking improved significantly by 14 places. India ascended from the 77th position to the 63rd position.

During the period of January-September 2020, Facebook made a huge investment of $43.5 billion in Mukesh Ambani’s Jio platform. This bullish trend is hoped to be continued in future.

Officials state that the interest in India’s “growth” story and India being past the worst part of the pandemic will drive FDI flows to India. Moreover, investors have confidence in India’s young and diligent population, the educated middle class and its IT industry will provide the much-needed confidence for investment. India proves to be the world’s second largest internet user base.

With relaxed norms in the defense production, it will lead to the modernization and upgrading of the defense system of India.

According to the Ministry, Foreign Direct Investment (FDI) proves to be a major driver of economic growth. It also presents itself as an important source of non-debt finance for India’s economic development.

Large part of the FDI in FY 20 came from Mauritius amounting to 29% of the total FDIs. This was closely followed by Singapore that invested 21%, united states, The Netherlands, Japan (7%) and United Kingdom (6%).

The key sectors that reported record high investment include services segment, computer software and hardware, automobiles, pharmaceuticals, construction, trading and telecommunications

picture credits-capitalmind.in

In April 2020, government made it mandatory to seek its approval for foreign investments from the countries that share land boundaries with India. This was a cautious step on the part of the Indian government to curb the flows of FDI from China.

FDI is important as the country in current scenario requires major investments to overhaul its infrastructure sector for its ambitious, visionary EV project and ‘make in India’ campaign to boost growth. Additionally, healthy FDI growth will help balance India’s balance of payments.

With recent positive reports by the IMF that India will be the only country to see a growth in 2 digits in FY21, foreign investors’ confidence is only to boosted. This can be a great opportunity for India to cash upon.

By Shivani Khanna

A woman who believes in equal rights and aspires to inspire people through her writings. I aspire to contribute to the economic world and society with diligence and thus being an economic advisor tops my career ambitions . I currently am pursuing Economic honours ( at undergrad level) from delhi university.