India is considering the regulatory mechanism for foreign investments in connection with the increase in FDI inflows – everything about it

According to reports, the government is considering introducing a foreign investment regulatory mechanism for post-investment review and monitoring in the country, Economic times reported, citing sources.

However, considerations are currently only at the level of discussion.

“It has been observed that all countries exercise surveillance over the FDI (foreign direct investment) that flows into their country. People suggest that there should be a surveillance mechanism in India too. This is a kind of supervision over the money that will appear in the country as FDI,” says one of the news agency’s sources PTI.

Such a mechanism could help ensure that FDI flowing into the country is beneficial to the economy and comes from legal sources.

India remains a top destination for foreign investors due to its huge $1.4 billion market, stable policies, demographic dividend, good investment returns and skilled labor.

To attract more foreign investment, the government has implemented various initiatives, including promoting ease of doing business by simplifying procedures and significantly reducing the regulatory compliance burden on the industry.

It has also liberalized FDI regulations in many sectors such as space, e-commerce, pharmaceuticals, civil aviation, contract manufacturing and digital media.

Additionally, the government has introduced a production-linked incentive (PLI) program targeting 14 sectors, including electronics and home appliances.

According to the official quoted in PTI in the report, measures to improve ease of doing business coupled with a zero-tolerance policy on corruption and efforts focused on emerging sectors such as electronics have helped promote the ‘Make In India’ initiative and boost domestic and foreign investment in the country.

Launched in September 2014, the ‘Make in India’ initiative aims to attract investment, promote innovation, develop world-class infrastructure and transform India into a global manufacturing, design and innovation hub.

Over the last decade, foreign direct investment in India has increased by 119 percent to a total of $667 billion, up from $304 billion in the previous 10 fiscal years (2005-2014).

More than 90 percent of these investments have gone through the automatic approval process.

Government data shows that FDI in India grew by 47.8 percent to $16.17 billion in the first quarter of this fiscal year, driven by strong inflows in sectors such as services, IT, telecom and pharmaceuticals.

The largest sources of FDI in India include countries such as Mauritius, Singapore, USA, Netherlands, United Arab Emirates, Cyprus, Japan and Germany.

Key sectors that attract significant foreign investment include services, software and hardware, telecommunications, pharmaceuticals and chemicals.

According to experts quoted in PTI report, a special law to address national security risks associated with foreign investment could strengthen India’s position under international law by providing a clearly defined legal basis for rejecting investment on national security grounds.

According to experts, this would not only reduce the risk of international challenges, but also demonstrate that India’s actions are transparent, predictable and in line with global best practices.

Also Read: Himachal Eateries identity controversy: Vikramaditya Singh meets Congress chief Kharge and says no compromise on Congress’s core principles