Modi’s $100 billion FDI blueprint faces a big hurdle as government loses early momentum

By: |
Published: February 25, 2019 2:50 PM

The Modi government in the past has taken various measures to attract FDI into the country which can be seen from the growth of FDI in the initial years of the government.

While India works on a blueprint to increase foreign direct investment (FDI) inflows into the country to $100 billion, the government data shows a slowing trend. Commerce and industry minister Suresh Prabhu on Saturday said that the government plans to raise FDI inflows to $100 billion through a targeted approach.

However, the recent data released by the Department of Promotion of Industry and Internal trade (DPITT) shows that the FDI inflows in India contracted by 7 per cent in the current financial year so far, indicating India’s fading attractiveness to foreign investors.

The FDI inflows in India during April to December of 2018 fell to USD 33.5 billion as compared to USD 36 billion during the same period of 2017, showed DPITT data. Mauritius has been ranked one among the top investing countries FDI equity inflows, followed by Singapore.

The Modi government in the past has taken various measures to attract FDI into the country which can be seen from the growth of FDI in the initial years of the government. However, the momentum gained earlier is again being lost. This is evident from the RBI data which shows that India experienced a growth rate of 54 per cent in FDI inflows during 2014-15, which has slowed down to just 3 per cent in 2017-18.

READ ALSO:   Where are jobs? Wait, real problem may be with wages; here’s why

The data raise serious concerns for the Modi government, especially with the general elections around the corner.
The latest rules on foreign direct investment under the draft e-commerce policy, which concerns many global firms investing in the Indian economic sector, may also further hurt the inflow of FDIs in the country.

The present NDA government’s several measures, such as Goods and Services Tax, Insolvency and Bankruptcy code, easing FDI norms etc, have been seen as making the country investor friendly. But foreign companies often find themselves in a fix when deciding to invest in India. The World Bank’s ‘Ease of doing business Report’ noted an improvement in India’s ranking but said that it still lags behind when it comes to enforcing contracts, registering property and paying taxes.

Do you know What is Cash Reserve Ratio (CRR), Finance Bill, Fiscal Policy in India, Expenditure Budget, Customs Duty? FE Knowledge Desk explains each of these and more in detail at Financial Express Explained. Also get Live BSE/NSE Stock Prices, latest NAV of Mutual Funds, Best equity funds, Top Gainers, Top Losers on Financial Express. Don’t forget to try our free Income Tax Calculator tool.

Financial Express is now on Telegram. Click here to join our channel and stay updated with the latest Biz news and updates.

Next Stories
1Kharif sowing 88% higher than last year; here’s why this season is faring better than last one
2West Bengal’s unemployment rate at 6.5% in June ‘far better’ than that of India, says CM Mamata Banerjee
3Biggest economic retaliation step! India puts complete ban on import of power equipment from China