New Delhi: Finance Minister, Nirmala Sitharaman strongly appealed to international investors to establish production centres, technology and innovation centres in India. In a business roundtable with senior executives in Chicago, she berated the world’s leading corporations to sell products and services beyond India’s huge domestic market and base in India itself.
The big question now is: Will global investors take this invitation seriously?
The response is probably “yes” but the investment decision is not made simply because of an invite. The cost, infrastructure, government policies and regulations, skilled labor and ease of establishing a business will be carefully reviewed before big investments are made by global companies.
Sitharaman said that India has several strengths for long-term investors such as the size of its market, the availability of a skilled workforce, improvement of infrastructure, technology capabilities and policy reforms. She also pointed out the increasing contribution of the country’s participation in the global supply chains.
The government aims to shift the focus of companies away from being mere assembly houses and enhance their manufacturing prowess in India. This includes the manufacture of components, engineering, advanced technologies and research and development. Opportunities were highlighted in areas like AI, digital technology, semiconductors, electronics, defence, infrastructure, food processing and financial services.
India’s digital infrastructure might also make the nation more appealing to foreign companies. Sitharaman pointed out platforms like UPI, Aadhaar, DigiLocker, ONDC and India Stack that are already running at large scale.
The other significant development is the developing network of Global Capability Centres in India. An increasing number of these centres are no longer just supporting organizations, but also playing a role in developing products, performing engineering functions, analysing and creating new ideas.
To encourage the investment, the government is also starting various schemes like Production-Linked Incentives, Atmanirbhar Bharat and iDEX. Such programmes aim to promote the development of the domestic industry and boost advanced technology and defence and electronics sectors.
But world investors will probably show some restraint. Predictable policies, quick approvals, stable infrastructure and competitive production costs are desired by companies. They will also make a comparative analysis of India to other manufacturing destinations before making a significant commitment.
However, India has a significant chance as businesses globally re-evaluate their supply chains. India has an advantage owing to the large domestic market and the capability to produce goods for the international market.
“Call for FDI” is therefore not a mere call to callers on foreign investment, but is Sitharaman’s message. It’s an effort to look at India not just as a market they are going to sell into, but a market that they are going to come up with a product from, manufacture a product from, and export from.
If India can sustain its business climate and make good use of these opportunities for a speedier implementation of projects, foreign investors may be coming back with capital invested.
