FDI boom time in India

On a rudimentary level, the paradox of India as an FDI destination arises from an investor’s confidence in investing in the Indian market. The Indian market has seen a meteoric rise in user groups for various types of commodities and services. However, in the preceding years, controversial rulings regarding tax evasion such as the Vodafone case have forced India Inc. to call the government out on its “tax terrorism” policies. With $31 billion of foreign capital inflows, (both FII and FDI) India has surpassed China and the US to take the first position in attracting largest FDI in the first half of 2015, a report said on Tuesday. This is something that would make the Prime Minister very happy as all those frequent flyer miles have finally amounted to something tangible.

Certain publications succeeding the launch of the Make in India (MII) initiative found out that a majority of start-ups are venturing into Southeast Asia for its ease of doing business. Furthermore, to fuel its complex industrial India has been finding it difficult to strike a balance between industrial development vis-a-vis its MII vision and <g data-gr-id="32">skilling</g> the indigenous <g data-gr-id="33">work force</g>. The country has bought massive tracts of land abroad, but the land acquisition does not successfully translate to better production. The Chinese have been successful at this strategy as they employ their own people even whilst setting industries abroad. It remains to be seen whether Indian can take a leaf out of the Chinese book of business. However, a skilled workforce continues to evade India Inc. Although the outward flow from corporates is increasing, whether this is in a bid to secure prestige among its foreign competitors or to encourage investment is a question. India Inc. needs to effectively collaborate with the centre’s approach to its MII. Recent suggestions have focused on education and skill imparting among other essential qualifications. The Indian presence in the global marketplace needs to be balanced with the importance it needs to give back home.

India has managed to woo more FDI than China and USA. Experts say India is expected to benefit from the slowdown in China and the overall sluggishness in global commodity prices including crude oil is expected to provide a cushion to the growth fortunes of Asia’s third-largest economy. The government is confident of achieving close to 8 percent growth in the current fiscal year. India has also moved up on Global Competitiveness Index by 16 places to 55th position.

The news comes as a shot in the arm for the Narendra Modi government that has taken several steps to attract foreign investment and has helped revive mood of investors since it came to power in May 2014. While there has been a demand for accelerating the reforms drive, the government has unveiled several initiatives such as ‘Make in India’ and ‘Digital India’ to lure investors. It has moved to ensure that the country moves up the ranking on the World Bank’s Ease of Doing Business and states have started their clean-up act on this parameter. But experts say there are several areas where the government needs to step up reforms. The areas where investors want more reforms include tax policy, labour laws, cutting red tape and issues linked to land acquisition. Investors have started taking an interest in the India growth story, and the recent visit of Modi to Silicon Valley triggered enormous interest from software and technology czars. Growth is expected to be one of the fastest in the world, and several multilateral agencies have said that India remains the bright spot among emerging economies.