India’s efforts to attract capital will not result in a flood of FDI until investors see policy stability. Analyse (200 Words)
Refer - The Hindu
Enrich the answer from other sources, if the question demands.
IAS Parliament 4 years
KEY POINTS
· Prime Minister elaborately pitched India as an investment destination that could serve as a manufacturing hub at the heart of global supply chains.
· The pitch made at the U.S.-India Strategic Partnership Forum comes in the backdrop of the government’s keenness to use the disruptions the COVID-19 pandemic has caused to the cross-border movement of goods as an opportunity to lure potential investors, especially those looking to relocate from China, to India.
· The reasoning appears to be that if even a few multinational enterprises can be drawn to set up manufacturing bases, either by shifting facilities or as new additional plants, then not only does the Indian economy stand to gain FDI, new jobs and tax revenue but it also makes a statement.
· The drive for self-reliance has spurred several Ministries to urge companies and industry sectors to replace imports with ‘Made in India’ substitutes.
· From the Shipping Ministry’s call for the design and manufacture of indigenous tugboats to auto component makers being told to abjure foreign parts, the thrust of the initiative is evidently ‘import substitution’.
· Separately, from the market access perspective, India’s decision to not join the RCEP multilateral trade pact would put investor companies seeking to tap consumers in RCEP member countries at a tariff disadvantage.
· Interestingly, most of the recent FDI announcements have been by way of stake acquisitions in existing businesses, and predominantly in the services sector. Attracting FDI into manufacturing will require the government to convince investors that it is committed not merely in words but in deeds as well to an open, barrier-free global trade and investment order.
