In a recent development, the center is considering foreign investment regulatory mechanism for post-investment review and monitoring in the country.
Government Mulling On Foreign Investment Regulatory Mechanism
So far, this topic is under consideration at the discussion level only.
According to the sources, “It has been observed that all countries do oversight on the FDI (foreign direct investment), which is coming into their country. People suggest that in India also, there should be an oversight mechanism. It’s a kind of oversight on money, which is coming up in the country as FDI.”
Basically this kind of mechanism could help in ascertaining that the FDI entering the country is beneficial to the economy and originates from legitimate sources.
So far, India continues to be a top destination for foreign investors due to its vast 1.4 billion market.
Stable policies, demographic dividend, good investment returns and skilled workforce also help the cause.
Here, the government has implemented various initiatives, including promoting ease of doing business through simplifying procedures and significantly reducing compliance burden for the industry in order to draw more foreign investment.
Besides this, the country has also liberalized FDI rules across multiple sectors such as space, e-commerce, pharmaceuticals, civil aviation, contract manufacturing, and digital media.
In addition to this, the center introduced the production-linked incentive (PLI) scheme targeting 14 sectors, including electronics and white goods.
Surge In FDI Inflows
It won’t be an exaggeration to say that the measures to improve ease of doing business, coupled with a zero-tolerance policy towards corruption, and the focused effort on emerging sectors like electronics have helped promote ‘Make In India’ and boost domestic and foreign investments in the country, as per the PTI report.
Further, this ‘Make in India’ initiative which was first time launched in September 2014 aims to attract investment, promote innovation, develop world-class infrastructure, and transform India into a global hub for manufacturing, design, and innovation.
In the meantime, the foreign direct investment into India has surged by 119 per cent, totalling $667 billion, up from $304 billion in the previous 10 financial years (2005-14).
Interestingly, almost 90 percent of these investments have come through the automatic approval route.
The first quarter of this financial year witnessed FDI soared by 47.8 per cent to $16.17 billion.
The growth is said to be driven by strong inflows in sectors such as services, IT, telecom, and pharmaceuticals.
When it comes to India, its largest sources of FDI comes from countries such as Mauritius, Singapore, the US, the Netherlands, the UAE, Cyprus, Japan, and Germany.
This growth is attracted by the key sectors attracting significant foreign investments from services, software and hardware, telecom, pharmaceuticals, and chemicals domains.
It appears that a dedicated law to deal with national security risks in foreign investment may strengthen India’s position with respect to international law by providing a clearly defined legal basis for rejecting investments on national security grounds, said experts in the PTI report.
