India Becoming Investment Hub In Corona Pandemic
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06-Aug-2020

India Becoming Investment Hub In Corona Pandemic

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Foreign investment in India is also seen to be increasing amidst the challenges of Covid-19. The Global Investment Report published by the United Nations Trade and Development Organization (UNCTAD) stated that India ranked ninth on the list of countries attracting the most FDI in 2019.

India was ranked 12th in 2018. This year too, India appears to be attracting more foreign investment. According to data released by the Department of Industry and Internal Trade Promotion (DPI), a record of $ 49.97 billion FDI came in the year 2019-20. This is 13 percent more than the previous year and the fastest growth in FDI compared to the last four financial years. 

As FDI increases, areas with FDI also expand. The services sector received the highest FDI of $ 7.85 billion in 2019-20. FDI is $ 7.67 billion in computer software and hardware, $ 4.57 billion in business, $ 4.44 billion in telecom, $ 2.82 billion in automobile, $ 2 billion in construction and $ 1 billion in chemicals. During this period, Singapore received the highest FDI of $ 14.67 billion. For the second consecutive year, the maximum FDI in the country has come via Singapore.

Five major things are emerging in the picture of FDI inflows into the country. One, FDI inflows from Singapore remain at the highest order. Two, FDI has been reduced from thereafter an amendment to the double tax avoidance treaty between India and Mauritius.

Three, the flow of FDI is moving towards India via Luxembourg, Cayman Islands, and Ireland. This is an area where there is a lucrative financial market for foreign investors due to simplicity in tax rules. 

Four, FDI from China in India has been declining continuously for the last three years. Five, FDI from the US to India is increasing. Since the beginning of this year, so far, US tech companies have gone ahead with an investment of around $ 17 billion to unlock the bright potential of the e-commerce market in the health, education, agriculture and retail sectors in India. 

It is worth mentioning that at the India-India Summit of the US-India Business Council on 22 July last, Prime Minister Narendra Modi said that new possibilities of FDI have been created in the US from India.

The famous Japanese financial rating agency Nomura has published in a report titled 'World after COVID-19' that India will get priority in foreign investment because of the world's negativity towards China. 

The government has taken all possible steps in the last five years to increase FDI and encourage foreign investment in a more sustainable way. The government has allowed FDI up to 100 percent in many sectors, as well as in many sectors such as defense, construction sector development, insurance, power sector, infrastructure, pension, other financial services, broadcasting, civil aviation, pharmaceuticals, trading. FDI policy reforms have been implemented. 


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Under the 'Ease of Doing Business' policy, a number of reforms have been made to speed up business in the country. Amendments to labor laws have been made keeping in mind the interests of producers and workers.

Changes have also been made in the rules of investment and disinvestment. There has been a drastic reduction in corporate tax. The tax has been reformed larger than GST. Allowing NRIs as domestic investors have made India a more attractive destination for FDI. 

Although India's growth rate in the current financial year is less likely to be positive. But due to the possibility of the economy moving forward in the coming financial year, foreign investors remain confident in India. It should be hoped that the government will then undertake an overall review of the FDI policy to brighten the prospects of FDI inflows into the country.

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