India’s reforms focus and economic growth will create a foreign direct investment (FDI) opportunity of $475 billion in the next five years, a survey based report prepared by industry chamber CII and global advisory firm EY says.
FDI in India has seen a consistent rise in the last decade, with financial year 2021-22 receiving fund inflows of $84.8 billion, despite the impact of the pandemic and geo-political developments on investment sentiment.
“Against the backdrop of growth challenges being faced by major economies of the world and new geopolitical issues, it is heartening to note that MNCs consider India an attractive investment destination and are planning expansion. We are confident that the continuing reform momentum by the Government will attract an increasing volume of investment from MNCs and facilitate their larger integration in the domestic supply chain," says Chandrajit Banerjee, Director General, CII.
The survey finds that as many as 71% of the Multi National Company (MNC) respondents plan to invest in India in the next 3-5 years with almost all (approximately 96%) being optimistic about India’s growth prospects. The country’s thrust on structuring modern Free Trade Agreements (FTAs) to boost trade and create cross-border investment opportunities also finds favour with MNCs with 82% supporting the trade initiatives as they expect these initiatives to create new opportunities.
The CII-EY report “Vision ‘Developed India’ Opportunities and expectations of MNCs” said that continuation of reforms to enhance ease of doing business, faster implementation of infrastructure projects, early closure of FTAs, strengthening of National Single Window for clearance, improving tax certainty, expeditious contract enforcement and decriminalisation of economic laws will enhance the attractiveness of India as a global investment destination.
On implementation of infrastructure projects, the MNCs said that in order to achieve the scale of infrastructure development envisaged in the NIP, it is important to focus on implementation issues, which in turn will make the projects more attractive for the private sector. On FTAs, the survey respondents said that FTAs with other economies would be very beneficial towards opening up of trade and services sectors, regulatory cooperation in standards, alignment on data and technology issues, investment agreements, sustainable trade, government procurement, gender and trade. “India must also improve efficiency of ports, shipping and customs via automation. Further reforms in the GST regime are needed towards credit rationalisation, dispute minimization, rationalisation of audit and assessment and broadening the tax base”, the CII-EY report says.
