The
Government in last three years has undertaken a number of reforms in different
areas of economy. In this regard FDI policy reforms carried
out by Government are nothing less than historic. The scale of reforms can be
gauged from the fact that during this period, 21 sectors covering 87 areas of
FDI policy have undergone reforms.This has resulted in increased FDI inflows
which year after year is setting up new records. If the FDI inflows of US
Dollar 55.6 billion for the year ending March, 2016 werean all-time high, the record
was not meant to last long. The country registered FDI inflow of US Dollar
60.08 billion in the next financial year (2016-17), thereby scaling an even
higher peak.
Increased
FDI inflows in the country are largely attributed to intense and bold policy
reformsthe Government undertook to bring pragmatism in the FDI regime. The
country has now become the topmost attractive destination for foreign
investment. A new direction was given to FDI policy reforms in 2014 itself when
conservative sectors like Rail Infrastructure and Defence were liberalized.
This was accompanied byreforms in other sectors such as Medical Devices andConstruction
Development. The momentum of positive business climate was further ignited with
launch of Make in India initiative in September 2014. The country in the year
ending March 2015 received FDI of US Dollar 45.15 billion as against US Dollar
36.05 billionin the preceding fiscal.
Reform
measures gained further momentum the following year. FDI policy on a number of
sectors was liberalized. With a view to provide ease of doing business, licensed
and non-sensitive activities were placed under automatic route and investment
caps were raised. FDI policy provisions were radically overhauled across
sectors such as Construction Development, Broadcasting, Retail Trading, Air
Transport, Insurance and Pension among others. In addition, initiatives such as
introduction of composite caps in the FDI policy and raising the FIPB approval
limit were also undertaken to promote ease of doing business in the country.
These initiatives resulted in the country receiving the then highest ever FDI
inflow of US Dollar 55.6 billion.
The
measures towards FDI policy liberalization and reforms continued in the last
year financial year. A paradigm shift was made in the FDI policy on retail and
other financial services sector. For retail trading of food products, the
Government permitted 100% FDI with unqualified condition that such food
products have to be manufactured and/or produced in India. The measure promotes
domestic industry, restricts imports, creates local jobs and results in conserving
valuable foreign exchange. In the Financial services sector,Government promulgated
that any financial sector activity which is regulated by any financial sector
regulator will be eligible for 100% FDI under automatic route, and approval
would be needed only for unregulated financial sector activities. During the
last financial year, FDI policy reforms were also undertaken in other sectors
such as Defence, Airport Infrastructure, Broadcasting, Animal Husbandry and
Retail Trading. The path breaking reform measures undertaken during the last
financial year have resulted in India surpassing the FDI received in 2015-16
and registering an inflow of US Dollar 60.08 billion during 2016-17, a new all
time high.
It
has been the endeavor of the Government to put in place an enabling and
investor friendly FDI policy. The intent all this while has been to make the
FDI policy more investor friendly and remove the policy bottlenecks that have
been hindering the investment inflows into the country. The steps taken in this
direction during the last three years have borne fruit as is evident from the
ever increasing volumes of FDI inflows being received into the country.
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Annexure
FDI
trends during the last three years, and after the launch of Make in India
initiative are presented below:
A. Trends
for the period of last 3 years (2014-15 to 2016-17)
• The
FDI equity inflow received during the last three financial years is US$ 114.41
billion. It shows an increase of 40% compared to previous period of three
financial years (2011-12 to 2013-14) (US $ 81.84 billion).
• The
FDI equity inflow received through approval route amounts to US$ 11.69 billion,
which is 64% higher than the previous three years (US $ 7.15 billion).
• The
overall manufacturing sectors have witnessed a growth of 4% in comparison to
previous three financial years (i.e. from US$ 48.03 billion to US$ 50.09
billion).
• The
total FDI inflow during last three years grew by 38%.
B. Trends
after Make in India initiative (October, 2014 to March, 2017)
•
The FDI equity inflow received after the launch of Make in India initiative
i.e. October, 2014 to March, 2017 of 30 months is US$ 99.72 billion. It shows
an increase of 62% compared to previous 30 months before the launch of MII
initiative i.e. April 2012 to Sept. 2014 (US $ 61.41 billion).
• The
overall manufacturing sectors have witnessed a growth of 14% in comparison to
previous 30 months before launch of Make in India initiative (i.e. from US$
35.52 billion to US$ 40.47 billion).
• The
total FDI inflow grew by 51%, i.e. US $ 137.44 billion in comparison to US $
90.98 billion of the previous 30 months before the launch of Make in India
initiative i.e. April 2012 to Sept. 2014.
C. Trends
in the Financial Year 2016-17
• The
FDI equity inflow received during the F.Y. 2016-17 is US$ 43.48 billion. It
shows an increase of 9% compared to previous F.Y. 2015-16 (US $ 40.00 billion).
It is the highest ever for a particular financial year.
• The
FDI equity inflow received through approval route during F.Y. 2016-17 amounts
to US$ 5.90 billion, which is 65% higher than the previous year (US $ 3.57
billion).
• The
overall manufacturing sectors have witnessed a tremendous growth of 52% in
comparison to previous F.Y. 2015-16 (i.e. from US$ 13.35 billion to US$ 20.26
billion).
• The
total FDI inflow grew by 8%, i.e. US $ 60.08 billion in 2016-17 in comparison
to US $ 55.56 billion of the previous year. It is the highest ever for a
particular financial year. Prior to this, the highest FDI inflow was reported
in the F.Y. (2015-16).
MJPS
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