India will improve production-linked incentives to lure FDI, says official
Latest data showed that FDI inflows in India fell 13% between April and December 2023. The fall was prominent in computer hardware, software, telecom, automobiles, and pharmaceuticals.
The Indian government is working on improving the performance-linked incentives (PLI) to improve the flow of foreign direct investments, Department for Promotion of Industry and Internal Trade (DPIIT) Secretary Rajesh Kumar Singh said.
India currently has 14 PLI schemes across sectors like bulk drugs, medical devices, pharmaceuticals, telecom, white goods, food processing, textiles, and drones, to name a few.
Latest data showed that FDI inflows in India fell 13% between April and December 2023.
The fall was prominent in computer hardware, software, telecom, automobiles, and pharmaceuticals. These are areas where the government has already offered production-linked incentives.
"FDI was 2.5% of GDP 10 years ago, and today it's over 4%. There is a dip in FDI inflows, but in India, it (the decline) is lower compared to other competing nations. We are at number eight in the world in terms of FDI inflows," Singh said.
Data released in January 2024 showed that India received ₹1.03 lakh crore in investments (both from domestic and foreign investors) thanks to the PLI scheme across the 14 sectors. The government has paid ₹44,150 crore in incentives so far and expects to end the financial year ending March 2024 with another ₹11,000 crore as incentives.
India has taken steps to improve the flow of dollar investments. Some of the recent reforms include the following:
'Automatic route' implies foreign companies investing in India do not need government approval.
Any investment in sectors like airports, construction, industrial parks, mining, manufacturing, and information technology does not need government approval, i.e., it is allowed under the 'automatic route'.
On the other hand, some sectors like insurance, pharmaceuticals, defence, and banking have certain limits. For instance, any investor can take up to a 49% stake in an air transport services company or a private bank through the automatic route.
However, if someone wants to invest more money for a higher stake than 49% in the sectors mentioned above, they would need the government's approval.
(Edited by : Sriram Iyer)
First Published: Feb 29, 2024 6:04 PM IST
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