Make in India campaign boosts FDI inflows
Foreign direct investment in India is on the up thanks to incentives aimed at foreign companies.
The Indian Government’s ‘Make in India’ campaign has received significant attention from countries across the globe. With the core objective of making India a global manufacturing hub by building the country’s capabilities and incentivising foreign companies to set up their facilities in India, the initiative has led to some important policy reforms and process improvements.
Focusing on 25 key sectors, the campaign has brought in significant reforms such as higher limits for foreign direct investment (FDI) and simplified investment norms for several sectors, including railways, defence, insurance and medical devices. The campaign has been supplemented by initiatives to make it easier to do business in India – simplifying processes of incorporation and obtaining clearances, easing regulatory requirements, digitising regulatory processes, along with various other state-specific initiatives. With the help of these campaigns, India has become one of the most favourable investment destinations in the world.
Since the launch of the Make in India campaign in September 2014, gross FDI inflows have increased substantially, by 32% to US$64.8bn, compared with a 16% increase in the 15 months before the campaign. The main sectors attracting investment include services, construction development, computer hardware and software, telecommunications and automotive.
In order to showcase the impact of the campaign and its achievements, and the potential of design and innovation across India's manufacturing sectors, the Government held a ‘Make in India Week’ in February 2016 in Mumbai. The event saw an investment commitment of over US$221bn, along with the announcement of several new policy reforms and investment plans. The Government has stated that in the coming year, it aims to further improve the environment for investors, help start-ups and small and medium enterprises to scale up operations, and promote quality jobs through innovation and by developing a design ecosystem.
The campaign’s immense success, despite sluggish global growth, is a positive sign for India’s future. While the world economy expanded by 3.1%, India witnessed robust growth of 7.6% in 2015-2016, becoming the fastest-growing major economy in the world, with further acceleration expected over the next two years. Manufacturing activity contributed 17.4% to the total value added to the economy in 2015-2016, and manufacturing growth, as measured by the Index of Industrial Production, accelerated to 3.1% during April–December 2015, from 1.8% in the same period of 2014.
While expectations of a global revival may be weak, it’s evident that prospects for India remain bright.
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