Foreign investors are increasingly getting bullish on the Narendra Modi government as inflation is down, current account deficit situation has improved, exchange rate has stabilised, foreign exchange reserves have risen and capital inflows have surged. While FIIs pumped in $45 billion in FY15, as compared with $9.44 billion in FY14, FDI rose 1.3 times to $41.22 billion in FY15 till February. The rising greenbacks have seen the 30-share Sensex gaining 24% from April 1 last year till date.
Some recent legislative reforms such as increase in the FDI limit in insurance to 49% from 26%, increase in FDI in defence from 26% to 49%, and 100% FDI in railway infrastructure have boosted investment sentiments. These reform measures, however, are at an early stage and need to be pursued.
If the government is keen to attract global corporations to manufacture in India, it will have to create the right atmosphere for businesses.
Improving India’s competitiveness and skill development, a point emphasised by the Prime Minister, will help the country move up the value chain, attract more foreign investment, create employment and ensure stable growth.
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