‘India’s 3rd largest economy dream hinges on consistent policy, support’

How do you see the investment scenario in India?

This is India’s time. The recent report from Ministry of Statistics and Programme Implementation indicates that the growth rate in financial year 2023-24 may be around 7.3 per cent. This is higher than any earlier estimation and shows how robust the fundamental of Indian economy is. The China plus one, policy of United States and European Countries have created interest in exploring opportunities of investments in India. This is leading to increased inflow of foreign direct investments in India. The total inflow of foreign investment in India during 2022-23 stood at $70.97 billion, out of which long term investment in equity is $46.03 billion. I am very hopeful about this trend continuing in future as well. The young population, liberalized policies, stable federal government, and improving infrastructure are few things which are creating the interest of foreign investors in India.

Which sector in the country are attracting the attention of the global investors the most and why?

Although the top attractor of investment is the service sector, especially software and related areas however, the recent trend indicates that global interest is now moving towards manufacturing in India. A report from Ministry of Commerce and Industry shows that foreign direct investment in manufacturing has increased by 57 per cent in 2014-2022 compared to 2006-2014 period. The total inflow in manufacturing sector in 2021-2022 was $21.34 billion, which is 76 per cent more than in financial year 2020-2021. The main interest is in manufacturing smartphones and other electronic devices because India has huge domestic market to consume it. The growing number of exported smartphones indicates that India is becoming hub for export of smartphones and other electronic devices. Other sectors like automobile and defense are attracting investments too. The Production Linked Incentives (PLI) is playing big role in encouraging investment in manufacturing sector. The size of domestic market, cheaper labour, liberalized policies and better infrastructure are few important factors in attracting the investment in manufacturing sector.

How do you see the policy of the Centre in this context?

In my opinion, aggressive and rationale policy framing by Central government in recent years have played a vital role in attracting investment. The Make in India initiative in 2014, which started the revolutionary changes in manufacturing sector was well thought and well timed policy decision by central government. The Ease of doing Business initiatives with a goal of simplifying the procedures, rationalizing legal provisions, digitizing government process and decriminalization minor and technical or procedural default helped wining the trust of the investors. The National Single Window system launched in 2021 to facilitate end to end support to investors, including pre-investment advisory, provide information related to land banks and facilitating clearances at Centre and State level is proving to be major confidence booster for foreign direct investment in manufacturing sector.

The “Industrial Corridor Development Programme”, with aim to develop Industrial corridor in partnership with State Governments, with objectives of developing greenfield industrial region/areas/nodes with sustainable infrastructure and make available Plug and Play Infrastructure at the plot level is creating newer opportunities. The schemes like Production Linked Incentives for 14 key sectors with an outlay of Rs 1.97 lakh crore to enhance India’s manufacturing capabilities and exports brought international manufacturers to India.

The Central government’s Modified Program for Semiconductors and Display Manufacturing Ecosystem is approved with the outlay of Rs 76,000 crores. This has triggered multiple investments in the sector. The FAME India Scheme (Faster Adoption and Manufacturing of (Hybrid) Electric Vehicle, with two phases has generated huge interest and resulted in setting up manufacturing plants for EVs and batteries.

You had attended the recently concluded Bihar Global Investor’s Summit in Patna. Kindly share your views...

It was great experience. Bihar has made so much development and so silently that most of the people attending the Bihar Business Connect were surprised to note them. The State Government has rationalized its Industrial policies to ensure the timely support to the existing and new industries. The industrial clusters with warehouses at multiple locations in Bihar, which are Plug and Play, appears a game changer. As an agri-based economy, Bihar is encouraging and facilitating food processing companies to come to Bihar. The Nitish Kumar government has signed MoUs for more than Rs 50000 crore. One of the US based Energy Company, Holtec International, has signed an MoU for first CSP plant in Bihar with an estimated investment of Rs 2200 crore. I am advising them on this project. Holtec International is a $14 billion company and pioneer in this technology and given right support, Bihar will become hub for their southeast Asia operations in clean energy sector.

How do you see the future of investment in the country which is fast on its way to cross 4 trillion mark in future?

The future seems to be very bright. India is set to become third largest economy in coming times. To achieve this feat, the government needs to be consistent in policies and decisions to keep supporting the industry. The consistency of pro industry government policies in last 9 years have created confidence among the investors. The growing number of investors, both in numbers and quantum of investment, is result of this trust on government’s intention to support the industry. The infrastructure sector alone would need more than $3 trillion in coming decade. The commitment of India to reduce carbon emission and achieving 500 GW of clean energy by 2030 would need another huge investment to the tune of $300 billion. These are huge opportunities, and I am sure the investors would be keen to participate in these opportunities. Further, India is currently fifth largest economy at $3.39 trillion and poised to replace Japan as third largest economy at $4.23 trillion. However, the top two economies, the US and China are $25.46 trillion and $17.96 trillion economies (based on nominal GDP 2022). India would need huge financial investment and consistent growth strategies to go anywhere near to these two economies. In my opinion, it is both a challenge and opportunity. India has already showcased its capacity to start and sustain higher growth rate of economic developments with consistent government policies. And keeping geo-political situation in view, I am sure the trend will continue in coming times too.