New Delhi: Bolstered by a nearly 26% rise in Foreign Direct Investment (FDI) to $42.1 billion during the first half of the current fiscal year, FDI has touched the $1 trillion mark since April 2000.
Over the last decade (April 2014 to September 2024), total FDI inflows amounted to $709.84 billion, accounting for 68.69% of the overall FDI inflow in the past 24 years. This robust inflow of investments underscores India’s pivotal role in shaping the global economic landscape the Ministry of Commerce and Industry stated today.
According to the Ministry, India’s achievement in attracting foreign direct investment (FDI) can be attributed to a range of contributing factors:
- Competitiveness and Innovation: India’s ranking in the World Competitive Index 2024 jumped three positions to 40th, from 43rd in 2021. Additionally, India was named as the 48th most innovative country among the top 50 nations, securing the 40th position out of 132 economies in the Global Innovation Index 2023, a significant improvement from its 81st position in 2015. These rankings highlight the country’s progress in enhancing its innovation ecosystem and competitive edge.
- Global Investment Standing: India was the third largest recipient of greenfield projects with 1,008 greenfield project announcements as per the World Investment Report 2023. The number of international project finance deals in India also increased by 64%, making it the recipient of the second-largest number of international project finance deals. These statistics underscore India’s growing prominence on the global investment stage.
- Improved Business Environment: India made remarkable progress in improving its business environment, climbing from 142nd in 2014 to 63rd in the World Bank’s Doing Business Report (DBR) 2020, published in October 2019 before its discontinuation. This 79-rank jump over five years reflects the government’s sustained efforts to simplify regulations, reduce bureaucratic hurdles, and create a more business-friendly environment, significantly boosting investor confidence.
- Policy Reforms: To promote FDI, the government has put in place an investor-friendly policy, wherein most sectors, except certain strategically important sectors, are open for 100% FDI under the automatic route. Further, to simplify tax compliance for startups and foreign investors, the Income Tax Act of 1961 was amended in 2024 to abolish angel tax and to reduce the income tax rate chargeable on the income of a foreign company.
Factors like improved global competitiveness, a dynamic innovation ecosystem, and a business-friendly environment have been key drivers. Initiatives such as liberalised sectoral policies, the Goods and Services Tax (GST), and recent policy changes, including greater FDI in the space sector, reflect the country’s proactive approach, the Ministry stated. It claimed such initiatives enhanced investor confidence, while competitive labour costs and strategic incentives continue to attract multinational corporations.
FDI has played a transformative role in India’s development by providing substantial non-debt financial resources, fostering technology transfers, and creating employment opportunities. The Ministry said as India continues to align with global economic trends, it is well-positioned to further strengthen its role on the global stage, fostering sustainable growth and development.
– global bihari bureau
