Why is India an attractive market for Investment?
By gkkedia Dt. May 7th, 2020
The world is almost certainly snared in a devastating recession delivered by the coronavirus pandemic. The abrupt halt of commercial activities threatens to impose economic pain, so profound and enduring , that it could take years to recover , major reason being “Entire world hit by the pandemic – All at once”.
However, many experts claim India to be optimistic and ensure our country continuing to be one of the world’s favourite FDI destinations in 2020. Thus, it’s time to convert a crisis into a windfall by the backing of Modi government’s liberalized norms, ecstatic jump in Country’s ranking in “Ease of doing business” and an expected modification in MIIUS(Modified Industrial Infrastructure Upgraded Scheme), aiming to promote emerging sectors, combat regulatory hurdles and making India a manufacturing hub.
Further, the Government aims to attain leadership in 12 sectors, inclusive of Industrial, Machinery, Transmission line, Auto corporate, Leather , Footwear, food processing, textiles, chemicals, etc. But setting targets has always been an easy step to intake with the real issues faced at ground level in their implementation. Therefore, present Government plans to implement “Plug and play policy” wherein it plans in using 23000 hectares bare land of Special Economic Zone in establishing a platform wherein land (free of cost) along with essential infrastructure. i.e. Electricity, transportation, water, already available at these places, shall be provided to Industrial houses so that these houses can directly proceed with manufacturing saving 2-3 years that would otherwise be required to get infrastructure ready. Thus, the policy is stated as a masterstroke to kill two birds by one arrow, one being combating the economic impact of the pandemic and the other being development of SEZ’s.
With such prudential steps by our steps on one hand and vast scope in “Digital Marketing” , crucial example being Investment by Facebook in Reliance Jio by $5.7 billion .i.e. nearing around 40000 crores, India surely has lot better chance of rejuvenating the momentum in its economy. Following are other major indicators pointing towards the same:-
ONE OF THE FASTEST GROWING ECONOMIES
- Foreign Direct Investment in India increased by 37% since make in India initiative by the Government.
- Many leading investors/stakeholders ranked India as the most attractive market in terms of investment.
- The Prime Minister plans to raise the economic contribution of manufacturing 15% to 25% of GDP.
- Proposal of Government to Five Trillion Economy India by 2024.
RISING GLOBAL COMPETITIVENESS
- India ranks 68th on the Global Competitiveness index 2018-19.
- Goods and Services Tax (GST), the biggest tax reforms since independence, paves way for a common national market by integrating various indirect Taxes.
- India to have the largest youth population by 2020.
- In the next five years India will have greater economic influence across the Asia-pacific Region.
HUGE DOMESTIC MARKET
- Private consumption will be four times by 2025
- Merger and Acquisitions activity in the country has reached 48 billion $ till 2019.
- Rising affluence is the biggest driver of increasing consumption in India.
- Growing Indian Education sector creating numerous investment opportunities which includes core and non
- Every sector within India’s consumer market is increasing, making India far less vulnerable to external
shocks and pressure than other emerging markets.
INVESTMENT FRIENDLY MARKET
- India is the most open and investment friendly economy, Prime Minister Narendra Modi told business leaders of the BRICS group in Brasilia.
- Huge number of youth population which includes Technician, Finance consultant and
- Bombay stock exchange is the second oldest market which charges less transaction cost.
- Positive Demographic along with Educated and growing workforce.
HEALTHY INDIAN INFRASTRUCTURE
- In 2018 India Ranked 44th out of 167 countries in World Bank Logistic performance.
- Over the next three Decades, more than 350 MN Indians will move into cities.
- Initiatives “housing for all” and “Smart City Mission” will direct the growth of the sector.
- The Indian Railway connectivity has been increasing continuously which is directly beneficial for Transportation.
RELAXATION IN TAXATION AND FDI POLICIES
- Preferential Tariff along with various Tax incentives.
- Revision in Tax Treaties with many countries. Lowering Corporate tax rate from 30% to 22%
- Liberalization in investment limit in many sectors(for ex. 100% FDI in insurance sector )
- Local sourcing norms will be eased for FDI in the single brand retail sector.
- Relaxation of FDI norms in Defense, manufacturing and coal mining sector.
- The Finance Minister in her budget speech proposed 100% tax exemption to SWFs on Interest, Dividend and
Capital gain earned from investment made in the Infrastructure sector till 2024.
- Increase in FPI (Foreign Portfolio investment) investment limit in corporate bonds to 15%
- NRIs to increase investment in government bonds and Securities.
Thus, FDI shall be play crucial role in the upcoming years as India needs huge investments to overhaul its infrastructure sector and to boost growth the Government would continue with FDI liberalization this year to attract global players. Further, with favourable demographics, India has a lot better chance of rejuvenating the momentum in the economy.