FDI: Government making changes to increase foreign investment
New Delhi| The government is considering simplifying processes in some sectors to attract more foreign direct investment (FDI) in India. A government official has shared this information. The Department for Promotion of Industry and Internal Trade (DPIIT) has discussed this topic with several government departments, regulators, industry organizations, legal companies, pension funds, private equity and venture capital investors.
“We have completed discussions with all stakeholders”, the official said. We have received suggestions on different issues. No final decision has been taken yet, but consideration is being given to simplifying the rules of procedure However, the official did not clarify in which areas the rules could be relaxed.
E-commerce sector is proposed to allow FDI in inventory based online business models for export only. At the same time, in press note 3 there is a demand to clarify the definition of change – beneficial ownership. Whereas, there has also been a suggestion of some change in the single-brand retail trading – policy. Let us tell you that, under Press Note 3, investors from countries bordering India have to take government approval before investing in any sector.
What is the status of FDI in India?
From April 2000 to September 2024, a total of more than $1 trillion in FDI came to India.
Investments increased 45% to $29.79 billion in April – September 2024.
Sectors like services, IT, telecom, automobile, chemical and pharmaceutical industries are attracting the most FDI.
What did the experts suggest?
1. The FDI approval process should be made time bound and transparent.
2. Single-window clearance system should be implemented.
3. Land acquisition and dispute resolution should be made easier.
4. ‘Deemed approval’ (if the application is not approved within the stipulated time limit, it should be automatically approved) should be implemented.
In this matter, Deloitte India economist Rumki Majumdar said that the possibilities of greenfield investment (investment in new projects) are high, which should be used effectively. At the same time, legal experts also suggested that the FDI policy should be simplified and clarified, so that foreign investors can be protected from unnecessary delays and uncertainty.
