Budget 2021 Expectations: Will Modi govt open more windows to attract FDI for ‘Make in India’? : 24-12-2020

Prime Minister Narendra Modi has been consistently trying to attract foreign investors to invest in India. Be it in the fields of pharma, manufacturing, or green energy, the focus of the government is to promote “Make in India” and make the country self-reliant. In the upcoming Budget as well, the government may make provisions to help investments reach the manufacturing and services sectors, in an effort to make them more capable to broaden their horizons. “The budget 2021 is definitely going to boost foreign investments in India provided the allocation of budget is favourable to various sectors such as manufacturing, electronics, automobile, etc,” Vishal Yadav, CEO and Founder, FDI India, told Financial Express Online. 

It will be imperative to build on forward-looking initiatives through digitalisation, identify the key areas attracting high investments, and bring in uniform and effective policies across the nation, Vishal Yadav added. Therefore, there is high hope from the Union Budget 2021-22 to further accelerate the investment environment in India, he further said. 

Highest FDI received during a pandemic 

Even as India suffered huge losses on the economic front due to the lockdown, the confidence of foreign investors remained high and India received the highest ever influx of FDI in India. The country received a total of $30 billion during April-September 2020, compared to $26 billion in the same duration last year, which was 15 per cent more FDI (in dollar terms) year-on-year.

Further, with relaxed FDI norms, the projections of FDI inflows are even higher in the coming years. The growth story of foreign direct investments into India is expected to create a favourable climate as there is a growing interest among overseas investors about the country amid the government’s continuing reform measures to further improve the business climate. 

“Easing the flow of capital – both debt and equity – to manufacturers is critical. There is scope for both reducing the interest rates and increasing the availability of credit for manufacturers,” Utkarsh Sinha, Utkarsh Sinha, Managing Director, Bexley Advisors, a boutique investment bank firm, told Financial Express Online. Budgetary announcement of sops for investments made in the manufacturing sector (similar to angel investor benefits, reduced capital gains obligations, and establishing fund of funds for the manufacturing sector) could help spur growth equity in India, Utkarsh Sinha added. There is also a need to streamline input tax policies for international imports for manufacturing components and ensure that refunds are processed predictably and on time, he further said. 

Drivers for investment into India

With the Government taking initiatives at the forefront of the FDI regimes such as relaxing FDI norms for various sectors including defence, coal mining, contract manufacturing, and single-brand retail trading, India is expected to be an undeniable candidate for investment by global investors in the time to come. Another factor that is driving the pace of growth is “Ease of doing business” as the government is working to reduce the compliance burden of businesses. The government has also made getting prior approval mandatory for foreign investment countries that share a land border with India, in order to curb  “opportunistic takeovers” of domestic firms.

Source : PTI