The high positive perception of India in the minds of superpowers as compared to competing markets such as China and Vietnam is the reason funds are consistently pouring and are projected to continue flowing into India.
The strong growth story of FDI into India is projected to continue in the upcoming year, as there is increased interest among international investors in the country with the government continuing to implement reforms to improve the business environment.
Sectors such as services, defence production and pharmaceuticals will be among the areas that will be looked at for new overseas investments in the months ahead as FDI norms are relaxed.
Alarming to numbers, FDI into India increased significantly despite the global slump and the COVID-19 outbreak. According to UNCTAD’s World Investment Report – 2021, India was the 5th largest beneficiary of FDI in 2020. According to the report, India’s FDI inflow increased by 25% in 2020 compared to the previous year. The overall amount of FDI received in 2020-21 was Rs. 4.42 lakh crores, compared to Rs. 3.53 lakh crores in 2019-20. Despite the interruption created by the COVID-19 outbreak, these figures suggest that India remains a popular location for FDI.
The high positive perception of India in the minds of superpowers as compared to competing markets such as China and Vietnam is the reason funds are consistently pouring and are projected to continue flowing into India.
Business leader in financially strong countries like the United States has also expressed increased trust in India’s stability. Previously, India was thought to be a more difficult place to do business than China or Vietnam because, while it was seen as politically and economically secure, it scored way lower on institutional stability, such as regulatory clarity and judicial systems. Things are improving today; India’s standing in the World Bank’s Doing Business report, released last year, improved 14 places to 63rd place out of 190 economies. In the previous year, the country was ranked 77th. The government has eased FDI restrictions in a number of fields, including coal mining, contract manufacturing, defence production, and single-brand retail commerce. We are changing as a nation and so our perceived growth story.
The bigbucks from HNI and institutions is expected to sustain and even increase in future as overall there has always been interest in India’s growth story particularly now because the worst part of the pandemic is over. Low bond yields & High global liquidity will push global investors to seek alternate destinations for higher returns; where India is likely to be the target.
Not to forget, there has always been a global recognition of the Indian growth potential due to its young & massive population and one more plus point added to the list is also being the world’s second-largest Internet user base, which is expected to be fuel to the fire.
Another new factor aided by the recent virus is realisation of the fact by investors that companies need to diversify their dependence. In a time of political unrest, multinational corporations have become increasingly aware of their overdependence on Chinese manufacturing. They need to diversify, and what better place to do it than India, with its well-established literate electrical and pharmaceutical production base.
Investors may share this same sentiment in the wake of a slew of anti-market regulatory crackdowns in China. Even they might plan to shift some of their emerging market exposure to India. As what will be better than an investor friendly and digitally sophisticated country.
All of this makes India an irresistible candidate for foreign investment. #Invest in India
Source: Business World
