Why Global Investors are looking to India as a reliable alternative during the uncertain times Part – II

Notable Government initiatives prompting Global Investors to look at India as a Reliable Alternative

1. Make in India

Launched in 2014, the Make in India programme intends to establish India as a worldwide manufacturing hub by providing:

Simplified regulations, including tax reductions and subsidies for establishing manufacturing plants for domestic and international manufacturers focussing on essential manufacturing sub-sectors such as:

• Defence;
• Automobiles;
• Biotechnology, and;
• Electronics.

The scheme has been instrumental in catalysing domestic production and technological innovation.

Digital India

The Digital India programme was launched in 2015 aimed at building a digitally enabled economy by improving the internet infrastructure and connectivity across the nation, promoting digital literacy, leading to a more tech-savvy workforce and customer base.

India’s digital economy is expected to contribute more than 20 % by 2026 and India is on track to become the third-largest economy by FY 2030-31. India represents a strategic opportunity for global corporations with a rising economy, enormous consumer base and vast pool of skilled people presenting significant advantages for global investments.

2. Production-Linked Incentive (PLI) Scheme

PLI scheme was announced in 2020 to make domestic manufacturing globally competitive and to create domestic leaders in manufacturing, by providing incentives to companies in 14 key sectors for increasing their manufacturing capabilities by spending on:

• Plant, machinery, equipment and associated utilities;
• R&D and transfer of technology.

By 2026, 836 applications have been approved across these sectors, leading to an investment realisation of Rs. 2.16 lakh Crore since the scheme was launched in 2020.

3. Expanding industries

From cutting-edge technology to life-saving drugs and aerospace, India’s industrial ecosystem offers opportunities for multinational companies looking to expand their operations.

Besides the traditional key sectors like the services sector, manufacturing, automobiles and construction driving foreign direct investment in India, the sectors like IT & ITeS, Electric mobility, FinTech, Renewable energy and MedTech are furthering the country’s growth story by propelling innovation and attracting investments.

4. Geographic location

India is situated in the heart of Asia, India provides a gateway to a 3.2 billion consumer market, connecting supply chains across South Asia, Middle East and Africa.

India is ideally positioned for investors seeking, not only a large consumer base, but also new supply chain routes and sourcing hubs.

5. Infrastructural advantages

India’s well-developed port, railway and road infrastructure offers distinct advantages to global investors seeking ready infrastructure with the country having the:

• World’s second-largest road network;
• Fourth-largest rail network;
• Third-largest domestic aviation market, and;
• A 7,500-kilometre coastline with 12 main and 200 non-major ports.

Besides civic infrastructure, India’s ready industrial infrastructure, including:

• 280 operational Special Economic Zones (SEZs),
• The PM Gati Shakti,
• Sagarmala Programme,
• Bharatmala Pariyojana,
• National Infrastructure Pipeline,
• Regional Connectivity Scheme (Udan), and;
• India Industrial Land Bank are some of the key initiatives transforming India’s logistics and infrastructure.

6. Technological advancements

India’s rapid digital transformation has revolutionised business operations. With over 900 million internet users, India is the world’s second-largest online market with growth in related sectors such as:

• Gaming, media and entertainment;
• E-commerce;
• Fintech;
• Education;
• MedTech and others are testament to the untapped potential of India’s digital economy.

Moreover, the rising adoption of the Unified Payments Interface (UPI) is marking a digital payment revolution, asserting the nation’s adoption of technological advancements and its advantages for increased market access.

7. Export incentives

India offers several export promotion schemes to encourage international trade and exports, such as:

• The Remission of Duties and Taxes on Exported Products (RoDTEP), implemented in January 2021, attempting to repay taxes and tariffs incurred by exporters.
• The Trade Infrastructure for Export (TIES) and the Market Access Initiatives (MAI) aimed to boost exports and strengthen trade infrastructure.
• Promoting manufacturing in India, the Export Promotion Capital Goods (EPCG) Scheme facilitates the import of capital goods to produce quality goods and services.

8. Investor friendly FDI Policy

The Indian government has implemented an investor-friendly FDI policy allowing most sectors, except certain strategically important ones to be open to 100% Foreign Direct Investment (FDI) under the automatic route. FDI policy provisions have been progressively liberalised and simplified across various sectors such as:

• Pension;
• Other financial services;
• Asset reconstruction companies;
• Broadcasting;
• Pharmaceuticals;
• Single brand retail trading;
• Construction and development;
• Power exchanges;
• E-commerce activities;
• Coal mining;
• Contract manufacturing;
• Digital media, and;
• Civil aviation.

Recent reforms in the FDI policy have been undertaken in sectors, such as:

• Defence;
• Insurance;
• Petroleum and natural gas, and;
• Telecom and Space.

Epilogue

India’s upward economic growth trajectory, favourable demographic trends and supportive business environment in today’s uncertain times present a unique opportunity for global investors. The initiative is also crucial to India’s vision of building a Viksit Bharat by 2047.

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