PM Gati Shakti plan, single window clearance to boost FDI inflows in 2022
Notwithstanding the global slowdown and the Covid-19 pandemic, total foreign direct investments into India rose to a record $81.72 billion in 2020-21
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New Delhi: A series of steps taken by the government to promote ease of doing business and liberalisation of foreign direct investment norms have helped India receive record FDI inflows so far this year, and implementation of measures like PM Gati Shakti, single window clearance and GIS-mapped land bank are expected to further push investments in 2022. Notwithstanding the global slowdown and the Covid-19 pandemic, total foreign direct investments into India rose to a record $81.72 billion in 2020-21.
During April-July this fiscal, FDI (foreign direct investment) into the country increased by 62 per cent to $27.37 billion. "Increasing FDI is a reflection of global trust in India's growth story. World wants reliable partners. India is providing all those parameters of growth which the investors would like to see before investment. "Further steps like rolling out of PM Gati Shakti National Master Plan (NMP), single window clearance and GIS (Geographic Information System) mapped land bank would help in attracting further investments," Secretary in the Department for Promotion of Industry and Internal Trade (DPIIT) Anurag Jain said.
The government is making all-round efforts to improve ease of doing business, he said, adding that the compliance burden has been reduced in more than 25,000 compliances over the last few years. "Structural reforms and a series of measures to promote ease of doing business, start up programmes and liberalisation of FDI policy are bringing in transformational changes in the industrial landscape. Efforts of the Centre to support the startup ecosystem has also created a buzz about India in the business and investment sector of the world," Jain said.
He added that so far 19 central government ministries/departments and 10 states have boarded the national single window system, which has been soft launched as a single point of clearance for investor related issues, as of now. Similarly, the India Industrial Land Bank is GIS enabled and has mapped over five lakh hectares of land, over 4,500 industrial parks, and shows vacant industrial plots available for investors, he added. Among several areas, the government has relaxed FDI norms in coal mining, defence production, contract manufacturing, and single-brand retail trading. Foreign direct investment equity inflows into India have touched $548 billion between April 2000 to June 2021, which is further strengthening the country's credentials as an investment destination.
About 28 per cent of the FDI came through the Mauritius route. It was followed by Singapore (22 per cent), the US (8 per cent), the Netherlands, and Japan (each 7 per cent) and the UK (6 per cent). The other big investors have been from Germany, Cyprus, France and Cayman Islands. Since 2015-16, total FDI inflows, which comprise equity inflows, reinvested earnings and other capital, have been recording significant growth. In that fiscal, the country received FDI worth $55.55 billion, an increase of 35 per cent over the previous year. FDI stood at $60.22 billion, $60.97 billion, $62 billion and $74.4 billion in 2016-17, 2017-18, 2018-19 and 2019-20, respectively. The key sectors which attracted the maximum FDI include services segment, computer software and hardware, telecommunications, trading, construction development, automobile, chemicals, and pharmaceuticals.
Although FDI is allowed through the automatic route in most of the sectors, in certain areas such as telecom, media, pharmaceuticals and insurance, government approval is required for foreign investors. Under this route, a foreign investor has to take prior approval of the respective ministry or department whereas for the automatic route, an overseas investor is only required to inform the Reserve Bank of India (RBI) after an investment is made. At present, FDI is prohibited in as many as nine sectors. They are lottery business, gambling and betting, chit funds, 'nidhi' companies (a type of NBFC), real estate business, and manufacturing of cigars, cheroots, cigarillos and cigarettes using tobacco.
The government had made prior approval mandatory for foreign investments from countries that share land border with India to curb "opportunistic takeovers" of domestic firms following the Covid-19 pandemic, a move which was aimed at restricting FDI from China.
