To boost domestic and foreign investments in India, the central government has taken various steps like – Reduced corporate tax rates, easing NBFC and bank liquidity problems, improving Ease of Doing Business, FDI policy reforms, compliance burden reduction, policy measures to boost domestic manufacturing through public procurement orders, Phased Manufacturing Program (PMP), and various Ministries’ Production Linked Incentives (PLI) schemes are among them.
Measures such as the India Industrial Land Bank (IILB), the Industrial Park Rating System (IPRS), the soft launch of the National Single Window System (NSWS), the National Infrastructure Pipeline (NIP), the National Monetisation Pipeline (NMP), and others have been put in place to facilitate investment.
As a result, in the fiscal year 2020-21, India received the highest ever annual FDI inflow of US$ 81.97 billion (provisional amount). FDI inflows totaled US$ 440.27 billion in the last seven financial years (2014-21), accounting for roughly 58 percent of overall FDI inflows in the last 21 financial years (2000-21: US$ 763.83 billion). Singapore (28 percent), Mauritius (22 percent), the United States (10 percent), the Netherlands (8 percent), and Japan are the top five nations from whom FDI equity inflows were received between April 2014 and August 2021.
During the same period in the last more than seven years, the Computer Software & Hardware sector attracted the biggest percentage of FDI inflows (19%), followed by Service (15%), Trading (8%), and Telecommunications & Construction (Infrastructure).
Empowered Group of Secretaries (EGoS) Project Development Cells (PDCs)
The Union Cabinet approved the formation of an Empowered Group of Secretaries (EGoS) and Project Development Cells (PDCs) in Ministries to fast-track investments in coordination with state governments and thus grow the pipeline of investible projects in India to increase domestic investments and FDI inflow with a view to support, facilitate and provide investor friendly ecosystem to investors.
There are presently Joint Secretary-level officers in charge of 29 Ministries of the Government of India. All PDCs have clearly defined investor engagement strategies in place, which include identifying potential investors, multi-level engagement with those who have expressed interest, and active engagement with a wide range of stakeholders to address existing investor issues, develop new projects, and promote existing investment opportunities.
Production Linked Incentive (PLI) Schemes
Keeping in mind India’s vision of becoming ‘Atmanirbhar’ and to enhance India’s Manufacturing capabilities and exports, in the Union Budget 2021-22, an outlay of INR 1.97 lakh crore (over US$ 26 billion) for PLI schemes for 13 key manufacturing sectors, starting from fiscal year (FY) 2021-22, has been announced.
The 13 key sectors include existing 3 sectors namely-
(i) Mobile Manufacturing and Specified Electronic Components,
(ii) Critical key starting materials/ Drug intermediaries & active pharmaceutical ingredients,
(iii) Manufacturing of medical devices and 10 new key sectors which have been approved by the Union Cabinet in November 2020.
These 10 key sectors are: (i) Automobiles and Auto Components, (ii) Pharmaceuticals Drugs, (iii) Specialty Steel, (iv) Telecom & Networking Products, (v) Electronic/Technology Products, (vi) White Goods (ACs and LEDs), (vii) Food Products, (viii) Textile Products: MMF segment and technical textiles, (ix) High efficiency solar PV modules, and (x) Advanced Chemistry Cell (ACC) Battery.
PLI Scheme
This year, the Union Cabinet approved the PLI Scheme for an additional sector, drones and drone components. With the announcement of PLI schemes, significant creation of production, employment, and economic growth is expected over the next 5 years and beyond.
The schemes have been designed with the goal to attract investments in sectors of core competency and cutting-edge technology; ensure efficiency and bring economies of scale in the manufacturing sector and make Indian manufacturers globally competitive so that they can integrate with global value chains.
Make in India
‘Make in India’ was launched in 2014, with the goal of facilitating investment, fostering creativity, constructing world-class infrastructure, and transforming India into a manufacturing, design, and innovation hub. The Indian government continues to place high priority on the development of a strong manufacturing sector.
It was one of the first ‘Vocal for Local’ campaigns to bring India’s manufacturing sector to the attention of the rest of the globe. Not only does the industry have the capacity to boost economic growth, but it also has the potential to employ a substantial portion of the young workforce.
Investment Clearance Cell (ICC)
While presenting Budget 2020-21, Finance Minister Nirmala Sitharaman announced plans to set up an Investment Clearance Cell (ICC) that will provide “end to end” facilitation and support to investors, including pre-investment advisory, land bank information and facilitate clearances at centre and state levels. An online digital interface was proposed for the cell’s operation.
One District One Product (ODOP)
The One District One Product (ODOP) programme aims to identify and promote the manufacture of one-of-a-kind products in each of India’s districts that can be globally marketed. This will help in realizing the district’s genuine potential, fueling economic growth, job creation, and rural entrepreneurship. 106 products have been identified from 103 districts around the country as part of the ODOP’s initial phase. Considerable success has been achieved for boosting exports under the ODOP initiative.
