According to a CII-EY report, India has optimistic growth prospects for foreign investments, with the potential to attract USD 475 billion in FDI flows over the next five years. Foreign Direct Investment (FDI) inflows into India have been steadily increasing over the last decade, with FY2021-22 receiving USD 84.8 billion, despite the impact of the pandemic and geopolitical developments.
According to the report, 71per cent of multinational companies (MNCs) in the country see India as an important destination for global expansion. The optimism stems from both short-and long-term prospects. In the report titled “Vision-Developed India: Opportunities and Expectations of MNCs,” the majority of MNCs believe that the Indian economy will perform significantly better in the next 3-5 years, with 96per cent of respondents optimistic about the country’s overall potential.
“Against the backdrop of global growth challenges and new geopolitical issues, it is heartening to note that MNCs view India as an attractive investment destination and are planning expansion.” “We are confident that the government’s ongoing reform momentum will attract an increasing volume of investment from MNCs and facilitate their greater integration into the domestic supply chain,” said Chandrajit Banerjee, Director General of the CII.
Based on the report, the strong momentum in domestic consumption, services, the digital economy, and infrastructure is determining the direction of India’s growth. The estimated real growth in consumption is the third highest in the world, trailing only the United States and China, and the rapidly expanding digital economy is expected to reach USD 1 trillion by 2025.
Besides the fact that India is one of the world’s fastest-growing large economies, the report cited strong consumption trends, digitisation, and a growing services sector, as well as the government’s strong focus on infrastructure and manufacturing. Significantly, over 60per cent of MNCs reported an improvement in the business environment in the previous three years.
MNCs value the impact of GST, the government’s digital push in various sectors, and tax transparency, among other reforms, it added.
As stated in the report, MNCs would like to see the effectiveness of the national single window for approvals and clearances improved, as well as greater tax certainty and a stronger contract enforcement mechanism. Aside from the consistent reform measures, what makes India an appealing investment destination for MNCs is its size and stability. The majority of respondents consider India to be an alternative to their China+1 strategy.
