Indian Economy: Easing road for FDI

Indian Economy: Easing road for FDI

In Britain on June 6, the meeting of the finance ministers of the G-7 group of seven developed industrial countries America, Britain, Germany, France, Canada, Italy and Japan agreed on a historic agreement to keep the global corporate tax rate at a minimum of 15 per cent. is made.

This tax agreement could prove to be the biggest and far-reaching change in the global tax landscape in decades. Such an agreement will be beneficial for India.

In the midst of the challenges of the Corona era, the increase in Foreign Direct Investment (FDI) in the country may see a further increase after this increase in the corporate tax rate. In the last financial year (2020-21), FDI in the country had reached a record level.

According to the recently released data by the Department for Promotion of Industry and Internal Trade (DPIIT), FDI grew by 19 per cent to $ 59.64 billion in the financial year 2020-21.

Total FDI, including equity, reinvestment income and capital, grew 10 per cent to $81.72 billion during the same period. The total inflow of FDI in 2019-20 was $74.39 billion.

It is noteworthy that Singapore remains the main centre of FDI in India. Singapore accounts for 29 per cent of the total FDI. It is followed by the US at the second position with 23 per cent and Mauritius at the third position with a nine per cent share.

It is also significant that Saudi Arabia has emerged as the top investor in India’s FDI scenario in the last financial year, with the highest percentage of investment.

FDI inflows from the US and UK have increased by 227 per cent and 44 per cent, respectively. As far as states are concerned, Gujarat tops in receiving FDI, followed by Maharashtra and Karnataka.

Given various sectors of FDI coming into the country, 44 per cent of FDI has come in the computer software and hardware sector. After this, 13 per cent of FDI has come in the construction infrastructure sector and eight per cent in the service sector.

It is clearly visible that the trend of e-commerce, digital marketing, digital payments, online education and work from home in the lockdown due to the Corona epidemic, increasing internet users, due to the digitalization of government services under Digital India across the country.

Several companies from around the world, including American tech companies, have stepped forward with investments to tap the potential of the e-commerce market in India in the health, education, agriculture and retail sectors.

If we consider why India has been given priority for FDI by foreign investors, when the country’s economy has been in a big decline in the last financial year, then many bright facts emerge in front of us.

One of the major reasons for increasing FDI in the country is the many historic reforms undertaken by the government in the last few years to ease industry-business. GST is implemented.

There has been a major reduction in corporate tax and major income tax reforms have been implemented. Various ambitious schemes have been implemented in the country like Aadhaar Biometric Project, infrastructure creation for railways, ports and airports.

Under the ‘Ease of Doing Business policy, many reforms have been made to accelerate business in the country. In the last six seven years, the world’s view of India has changed in terms of investment with the introduction of new laws and reforms on various economic fronts by abolishing more than 1,500 old and useless laws.

If we want to reach a new high in the current financial year 2021-22, over and above the FDI of about $ 82 billion achieved under the previous fiscal, then it will be necessary to further liberalize the current FDI policy.

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AUTHORNishant Chandravanshi

Nishant Chandravanshi is a YouTuber, Indian News Personality, Political Commentator & Activist. Nishant Chandravanshi is the founder of Chandravanshi & The Magadha Times.


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