PM says pandemic has taught global supply chains need to be built on trust and policy stability
Prime minister Narendra Modi on Thursday invited US companies to invest in India by taking advantage of its stable tax regime and attractive Foreign Direct Investment (FDI) policies.
Addressing the US India Strategic Partnership Forum (USISPF), he said India received over $20 billion FDI flows this year and tech giants such as Google and Amazon have announced long term plans for India. Hinting at the opaque way the Chinese government handled the coronavirus pandemic, Modi made a strong pitch to position India as the only possible alternative for global manufacturing.
“This pandemic has also shown the world that the decision to base global supply chains should not only be based on cost but also on trust. Along with affordability of geography, companies are now also looking at reliability and policy stability. India is the location that has all of these qualities. As a result, India is also becoming one of the leading destinations of foreign investment,” Modi stressed.
FDI into India rose by 20 per cent in 2019 when global flows fell by 1 per cent, Modi said, adding this showed the success of the government’s FDI policy. According to official statistics, FDI in 2019-20 grew by 14 per cent, a four-year high, to a record $49.8 billion. The figures had comforted policymakers who were worried about tepid growth in equity investments, which had contracted by 1 per cent in 2018-19 and risen only 3 per cent in the year before that.
Now, as the ongoing pandemic devastates the global economy, Modi called for a co-ordinated effort to get back growth. “We should keep our focus on ramping up or capacities, securing the poor, and future proofing our citizens. This is the path India is taking,” Modi said. Case in point, there are more than 1600 coronavirus testing labs nationwide as compared to just one in early January, which has led to India having a low fatality rate, he added.
Clarifying the Atmanirbhar Bharat policy, he said it merged local with global and showed India’s strength in integration with global forces. “Atmanirbhar Bharat will transform India from a passive market to an active manufacturing hub,” he said.
He said the coal, mining, railways, defence, space and atomic energy sectors had been opened up recently. He added that production linked incentive scheme for mobile phones, electronics, pharma sector had been well received by the world.
According to officials, blueprints are being drawn up for such schemes in nearly a dozen sectors with plans being led by the Niti Aayog and the finance ministry. Most of these would be financed from the funds diverted away from the Merchandise Exports of India Scheme (MEIS), currently India’s largest scheme for export incentives which cost Rs 43,500 crore in 2019-20. Now, specific incentives designed for individual sectors will be tailor made to secure more manufacturing and exports.
On Thursday, Modi added that reforms in agricultural marketing would also bring several opportunities.