Highest Annual FDI Inflow Of $

Highest Annual FDI Inflow Of $ 84.84 BN In 2021-22: Govt

Centre’s reforms resulted in a consistent increase in Foreign direct investment (FDI) inflow which has grown from USD 45.15 billion in 2014-2015 to USD 84.84 billion in 2021-22, the Minister of State for Commerce and Industry, Som Parkash said in reply to Parliament on Wednesday.

‘Make in India’ is an initiative launched on September 25, 2014, to facilitate investment, foster innovation, build best-in-class infrastructure, and make India a hub for manufacturing, design, and innovation. It is one of the unique ‘Vocal for Local’ initiatives that promoted India’s manufacturing domain to the world, the Minister said.
According to the Ministry of Commerce and Industry, the ‘Make in India initiative has significant achievements and presently focuses on 27 sectors under Make in India 2.0. The Department for Promotion of Industry and Internal Trade (DPIIT) coordinates action plans for 15 manufacturing sectors, while the Department of Commerce coordinates 12 service sector plans. Investment outreach activities are done through Ministries, State governments, and Indian Missions abroad for enhancing International cooperation and promoting both domestic and foreign investment in the country.

In addition to ongoing schemes of various Departments and Ministries, the government has taken various steps to boost domestic and foreign investments in India. These include the introduction of Goods and Services Tax, reduction in Corporate tax rate, interventions to improve ease of doing business, FDI policy reforms, measures for reduction in compliance burden, policy measures to boost domestic manufacturing through public procurement orders, Phased Manufacturing Programme (PMP), to name a few, MoS Som Parkash said.

The reforms taken by Government have resulted in increased FDI inflows in the country. FDI inflows in India stood at USD 45.15 billion in 2014-2015 and have continuously increased since then, and India registered its highest-ever annual FDI inflow of USD 84.84 billion (provisional figures) in the financial year 2021-22, he said.

He said the series of measures taken by the Government to improve the economic situation includes the introduction of the Production Linked Incentive (PLI) scheme in various Ministries, investment opportunities under the National Infrastructure Pipeline (NIP) and National Monetisation Pipeline (NMP), India Industrial Land Bank (IILB), Industrial Park Rating System (IPRS), the soft launch of the National Single Window System (NSWS), etc. An institutional mechanism to fast-track investments has been put in place, in the form of Project Development Cells (PDCs) in all concerned Ministries/ Departments of the Government of India along with an Empowered Group of Secretaries (EGoS).

Keeping in view India’s vision of becoming ‘Atmanirbhar’ and enhancing India’s manufacturing capabilities and exports, an outlay of Rs 1.97 lakh crore (over USD 26 billion) has been announced in Union Budget 2021-22 for PLI schemes for 14 key sectors of manufacturing, starting from fiscal year (FY) 2021-22, the Minister informed. (ANI)

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US Inflation Signs Of Cooling Off

FDI Inflows To Cross $100 BN In 2022-23

The inflow of FDI (foreign direct investment) to India is expected to surge to a record $100 billion in the current financial year, helped by the Make-in-India initiative and steps taken by the government to improve the country’s ranking in ease of doing business.

According to data released by the Ministry of Commerce and Industry on Saturday, FDI to India almost doubled to $83.6 billion in 2021-22 from $ 45.15 billion in 2014-2015.
To attract foreign investments, the Government of India has put in place a liberal and transparent policy wherein most sectors are open to FDI under the automatic route. FDI inflows in India stood at US $ 45.15 billion in 2014-2015 and have since consecutively reached record FDI inflows for eight years, the Ministry of Commerce and Industry said in a statement.

The year 2021-22 recorded the highest ever FDI at $83.6 billion. This FDI has come from 101 countries and invested across 31 UTs and States and 57 sectors in the country.

On the back of economic reforms and Ease of Doing Business in recent years, India is on track to attract $100 billion FDI in the current financial year, the ministry said.

Launched in 2014, ‘Make in India’ initiative has played a crucial role in transforming the country into a leading global manufacturing and investment destination. The initiative is an open invitation to potential investors and partners across the globe to participate in the growth story of ‘New India’. Make in India has substantial accomplishments across 27 sectors. These include strategic sectors of manufacturing and services as well, the ministry said.

The Production Linked Incentive (PLI) scheme, across 14 key manufacturing sectors, was launched in 2020–21 as a big boost to the Make-in-India initiative. The PLI scheme incentivizes domestic production in strategic growth sectors where India has a comparative advantage.

This includes strengthening domestic manufacturing, forming resilient supply chains, making Indian industries more competitive, and boosting export potential. The PLI Scheme is expected to generate significant gains for production and employment, with benefits extending to the MSME ecosystem.

Recognizing the importance of semiconductors in the world economy, the Government of India has launched a USD 10 billion incentive scheme to build a semiconductor, display, and design ecosystem in India.

To strengthen the Make in India initiative, several other measures have been taken by the Government of India. The reform measures include amendments to laws, and liberalization of guidelines and regulations, in order to reduce unnecessary compliance burdens, bring down costs and enhance the ease of doing business in India. Burdensome compliance with rules and regulations has been reduced through simplification, rationalization, decriminalization, and digitization, making it easier to do business in India.

Additionally, labor reforms have brought flexibility in hiring and retrenchment. Quality control orders have been introduced to ensure quality in local manufacturing. Steps to promote manufacturing and investments also include reductions in corporate taxes, public procurement orders, and a phased manufacturing program.

To promote the local industry by providing their preference in public procurement of goods, works, and services, the Public Procurement (Preference to Make in India) Order 2017 was also issued pursuant to Rule 153 (iii) of the General Financial Rules 2017, as an enabling provision. The policy aims at encouraging domestic manufacturers’ participation in public procurement activities over entities merely importing to trade or assembling items.

The policy is applicable to all ministries or departments or attached or subordinate offices or autonomous bodies controlled by the government of India and includes government companies as defined in the Companies Act, the Ministry of Commerce & Industry said. (ANI)

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FDI reforms welcome but investors need confidence

By Vipin Pubby
The sweeping overhaul of Foreign Direct Investment (FDI) norms across nine key sectors on the heels of the controversial announcement of the departure of charismatic RBI governor Raghuram Rajan has sent out conflicting signals on the economic front. Although the reforms may have been in the works for some time, the timing appears to aim at the damage control as a fallout of Rajan’s exit and contain any adverse impact on investor confidence from his departure.
Modi government has repeatedly proved that it is second to none as far as the perception game is involved. Thus whether it creates a grand event out of Modi’s address at the Madison Square and later in addressing the US Congress or attracts focus of attention when interacting with the Chinese premier or his Pakistan counterpart or even putting India’s stamp on the International Day of Yoga, the government had been striking the right chords at the right time.
The first set of FDI relaxations had come shortly after the Bharatiya Janata Party (BJP) had lost the prestigious Bihar elections and these did well to draw the world’s attention away from the humiliating defeat. The second set comes two days after Rajan announced, evidently after getting the signals from the government, that he would not seek extension of his term as had been the norm with his predecessors.
Rajan, a no-nonsense economist, who spoke his mind and took his own decisions, was a thorough professional. There were indications of differences between him and the government on certain key issues. His attempt to clean the banks of bad loans and holding on to high interest rates may have ruffled a few feathers but on the surface the government had been giving him enough elbow room. Some of his comments, like Indian economy compared to one-eyed King in the land of the blind, also drew ire of certain elements. The first indications about his imminent exit came from the maverick Subramanian Swamy, the outspoken Rajya Sabha MP, who demanded his ouster because he was “anti national”. His loss would be felt although there are several other professionals who may prove to be equally and even better than him if given a free hand.
The timing should, however, not take away entirely the significance of the announcement regarding FDI reforms. Perhaps the most direct impact on the consumers in the country would be felt by the relaxations in the retail sector. Though companies with 100 per cent FDI could open single brand stores, there was the clause that made it mandatory for them to source 30 per cent of the merchandise from India. Under the relaxed norms there is no need to disclose sourcing for first three years for products with cutting edge technology. This would enable companies like Apple to open its own signature stores.
Similarly in the food sector FDI in multi-brand food retail was prohibited but now FDI upto 100 per cent would be allowed in retail trading enabling foreign giants like Tesco and Walmart to set up dedicated foot retail stores if the items are made in India.
However, it is the in the sectors of defence, aviation and pharma that major investments are expected. Domestic airlines can now sell cent per cent to foreign investors although the cap of 49 per cent stays on foreign airlines. This could boost competition and services. In defence, the condition of access to state-of-the-art technology has been done away with while in pharma no government approval would be required for upto 74 per cent of FDI with the possibility of a sharp increase in foreign investment in the sector.
The nine key sectors had been relatively laggards in attracting FDI and together accounted for only 11 per cent of the total FDI received by India.
The BJP, when it was in the opposition, had opposed relaxations in norms and had alleged that these were a result of capitulation before the west. Times have now changed and world is a much smaller place. Even the thinking in the Left, which had been opposed to relaxations in FDI, has undergone a change. Though the usual noises over the decisions are expected, the reforms were long due and would open more avenues for foreign investment.
The government has claimed that with these relaxations, India now is “the most open economy in the world” to FDI. Although the government’s first such list of reforms in November 2015 had evoked good response, the economists are preferring to wait for the response from investors especially in view of the ouster of Rajan. The investors would like to look for stability and professionalism in handling economic issues. The appointment of the new RBI governor would be watched with keen interest.
At the same time the government shall have to ensure growth in the employment sector. Unfortunately, there has been no significant improvement in generation of employment opportunities since the Modi government took over. Although the latest relaxation of norms is expected to result in more employment opportunities, much would depend on the kind of response that the MNCs give to the new norms. The country still lags behind in the rankings for ease to do business. For that the government needs to take practical steps to create a hassle free and efficient system of governance which would effectively cut down red tape and hold authorities accountable for their actions and non actions.]]>