INDIA IS SETTING THE RIGHT TRACK TO ATTRACT AND LEVERAGE THE FOREIGN DIRECT INVESTMENTS POST-PANDEMIC

The pandemic that the world is facing for a year now has brought tremendous changes in the spheres of economics and geopolitics especially, away from China.

- VAIBHAVI PINGALE

With anti-China feelings, many countries planned to shift their manufacturing units from China to other countries. This can be observed as one of the benefits India has had during the pandemic era. It has observed the largest inflow of FDI.

Commerce and Industry Minister, Piyush Goyal said that the increase in FDIs into India in July-September 2020 to $28.1 billion indicates global investors’ preference for the country’s enabling environment despite COVID-19.

From East India Company, initially, a profitable trading company investing in India in the pre-independence era to post-independence a huge inflow of worth $500.12 billion between April 2000 to September 2020, India has been witnessing a journey of FDIs with lots of ups and downs. FDI has been an important monetary source for India’s economic development post1991 reforms.

The on-going pandemic has pushed many economies across the globe into recession. The earlier recession experience showed a V-shaped recovery, the services bounced back very quickly compared with manufacturing. However, this time manufacturing bounced back much quicker than services. As the services are dependent on social distancing that had to be maintained during pandemic times.

The worrisome fact is that the FDI in India is concentrated more in the service sector. In the last twenty years from 2000 to 2019, the services sector, computer software and hardware, trading, and real estate sectors collectively accounted for almost 40 percent of FDI. There is a heavy tilt away from manufacturing.