Why this is important to Wisconsin businesses: The reforms are already working to increase foreign direct investment.
In his presentation of the 2018-19 Union Budget to Parliament on Feb. 1, Indian Finance Minister Arun Jaitley emphasized the importance of ease of doing business. The Indian government has successfully implemented a series of fundamental structural reforms. Consequently, foreign direct investment (FDI) equity inflow has increased significantly, from $21.8 billion in 2012-13 to $43.5 billion in 2016-17. In the current year, FDI equity inflow has gone up by 17 percent to $25.4 billion for the period April-September, compared to $21.6 billion for the same period in 2016-17.
The measures taken by the government have made it much easier to do business in India. The goods and services tax, established to subsume various indirect taxes levied at different levels, has paved the way for a transparent indirect tax regime. Benefits to the poor have been targeted more effectively with the use of digital technology. The demonetization of high-value currency has reduced the amount of cash currency in circulation in India. It has increased the taxation base and spurred greater digitization of the economy. The insolvency and bankruptcy code has changed the lender-debtor relationship. The recapitalized banks will now have a greater ability to support growth. All these structural reforms in the medium and long term will help the Indian economy achieve stronger growth.
The Indian economy is on the recovery track, with the manufacturing sector back on a good growth path and the services sector having resumed its high growth rates of over 8 percent. India’s exports are projected to grow by 15 percent in 2017-18. India’s Economic Survey for 2017-18 has pegged the country’s growth at 6.75 percent for 2017-18 and over 7 percent for 2018-19. At present, India is a $2.5 trillion economy – the seventh-largest in the world (expected to become fifth-largest soon), and third-largest in terms of purchasing power parity.
Indian Prime Minister Narendra Modi’s vision of “Minimum Government and Maximum Governance” has inspired government agencies in implementing legislative, administrative and policy reforms. These reforms led to a massive jump in India’s ease of doing business rankings. India jumped 30 places and entered the top 100 club in the World Bank’s 2018 Ease of Doing Business report.
The Indian government has opened up private investment in defense production, including liberalizing FDI. It will issue a separate policy for hybrid instruments. Hybrid instruments are suitable for attracting foreign investments in several areas, especially for startups and venture capital firms.