The Department of Industrial Policy and Promotion (DIPP) has released data indicating that Foreign Direct Investment (FDI) in India has grown by 18% in 2016. India attracted $46 billion as FDI in 2016 compared to $39.32 billion in 2015.
The services, telecom, automobile, trading, computer hardware and software sectors attracted some of the highest foreign inflows, with Singapore, Japan, Mauritius and the Netherlands being some of the biggest foreign investors.
The government is looking to further liberalize the FDI policy and improve the business environment to attract more investors in the future. Presently, the government is looking to free up the multi-brand retail sector for foreign investment under the condition that foreign retailers sell goods with a ‘Made in India’ label.
Currently, regulations do not allow foreign investors to fully own stores in India, which is an anomaly in the ‘Make in India’ initiative. Government guidelines do not permit 100% foreign investment in front-end retail to sell sub-standard goods, but this move will help boost manufacturing and will, in turn, immensely help in job generation.
In 2015 the government allowed 100% foreign investment in food trading as long as the goods were produced domestically.
During the budget 2017-18 the Finance Minister, Arun Jaitley, announced that the government was planning on further relaxing FDI norms and was also going to phase out the Foreign Investment Promotion Board (FIPB).
India requires $1 trillion to overhaul its infrastructure sectors, such as, highways, ports, and airports to support growth and FDI is considered crucial to this cause. A strong inflow of foreign investment will help India improve its Balance of Payments (BOP) and will strengthen the value of the Indian Rupee against other foreign currencies.