[Gist of Yojana March 2021] Foreign Direct Investment

Mains Paper 3: Economy
Prelims level: Foreign Direct Investment
Mains level: Indian Economy, growth and development


• Investors across the globe have acknowledged India’s tremendous opportunities, scope and potential.

• Despite widespread shutdowns across large economies this year, India received an unprecedented USD 35 billion in foreign investments between April and August 2020. the largest ever in the first five months of the fiscal year and 13 percent higher than in the same period of the previous year2. In the financial year 2019-2020. India received FDI worth USD 73 billion, the highest ever in a single year. Invest India itself has facilitated over USD 166 billion of indicated investments and helped create more than 2.7 million new jobs since its inception.

For helping unleash India’s talent, creativity, and zeal amidst a global public health crisis. Invest India won the UN’s coveted recognition from among 180 IPAs across the world.

India Shines Through:

• The intuitive and forward-thinking policies of the PM helped India stabilise itself even as the virus disrupted global businesses and established practices. The pandemic exposed vulnerabilities of highly specialised supply chains and sent companies scrambling to ensure their supplies. Even for essentials like medical devices and medicines, there were often no fallbacks. This had two important outcomes.

• First, market players were forced to revaluate their business models right from sourcing the raw materials to manufacturing, shipping and last-mile deliveries. Many companies became keen to onshore supply chains or at least bring them closer to their markets. In this process, India, which rests at important nodal points geographically and commercially, sprung up as a viable alternative. With its large domestic market, vast skilled labour force and, a liberal FDI regime, India began to appear as an opportunity waiting to be explored.

• Second. Indian MSMEs, with their quick-to-adapt businesses and frugal innovation helped India swim through the worst initial months of the Covid-19 crisis. In so doing, they exhibited the country’s inherent business potential while also putting on display Indian creativity and talent.

• India’s robust pharmaceutical industry too displayed global leadership in quick supplies of generic medicines—paracetamol and hydroxychloroquine (HCQ). A combination of these factors has contributed to making India a leading FDI destination and a foremost manufacturing hub of the world. Various policy measures adopted by the government over the last few years augment this global inclination in favour of India.

Making India Investor-Friendly:

• The Government is deeply committed to enhancing the ease of doing business and the ease of living in India. It has enabled key reforms, the results of which have become evident over the years. Between 2014 and 2019, India witnessed a more than two-fold enhancement in its ease of doing business measures. This also marks the onset of greater investor faith in India; increasingly the investor community has reacted positively to measures towards greater transparency.

Developing a Robust Infrastructure:

• The PM recognises that supporting successful businesses takes more than policy and has taken measures to bridge that gap to propel us forward. Manufacturing is grounded in strong, cutting-edge and modern infrastructure. To achieve the target of a USD 5 trillion economy by 2024 and meet the demands of its entrepreneurial citizenship, India must rapidly develop and upgrade its infrastructure. The National Infrastructure Pipeline (NIP) launched in August 2020 will focus on this urgent national need.

• The NIP creates a fast-track institutional, regulatory and implementation framework for infrastructure projects and benchmarks performance as per global best practices and standards. It will work towards ensuring that public infrastructure projects are efficient, inclusive, and disaster-resilient. The idea is to improve citizens’ ease of living and provide equitable access to infrastructure and make economic growth more inclusive.

India and the Path Forward:

• Under the ambitious and timely Aatmanirbhar Bharat Abhiyan, India is envisaged as a crucial nodal point in global supply chains, with a vast, skilled, and growing workforce and a large domestic market. Backward integration of global supply chains with local manufacturers and retailers will also provide a boost to Indian MSMEs and foster overall growth in the economy. Most crucially, Aatmanirbhar India is about resilience and decentralisation. The incentives thus provided and structures established will help us achieve the government’s aim for a USD 5 trillion economy while driving all stakeholders within the country to work tirelessly towards creating one of the best business environments in the world.

• With its huge population, India presents a massive opportunity in terms of demand and consumer base. With its stable macroeconomic reforms, it is also building a policy environment that will support industry and drive demand. Thus, with evolving policies, upgradation of infrastructure, easier access to clearances and a competitive tax regime, India is continuously redefining the definition of ‘Ease of Doing Business’.

• The pandemic has allowed India to successfully reimagine its role as a global economic force in the modem age. With its youthful outlook, dynamic energy, immense economic opportunity, and a proactive and visionary government, India is fast securing its place as an efficient, digitally-savvy, and welcoming destination for all businesses.

Subscribe to Get Weekly updates

Get daily current affair video, detailed current affairs PPT for quick revision and Free One Liner PDF directly in your inbox. Subscribe now to get this month's one liner for FREE.