Around 3000 world leaders from the fields of business, politics, academics, etc had attended the 48th World Economic Forum (WEF) Annual Meeting from 23rd January 2018 to 26th January 2018 in Davos, Switzerland to discuss major global issues and to brainstorm on probable solutions to address those issues.
The Prime Minister of India, Shri Narendra Modi had also attended the Meeting and addressed the gathering of world leaders and global Chief Executive Officers (CEOs) to discuss about the three most significant challenges to civilization i.e. “climate change, terrorism and an increased self-centredness.” He also spoke about the growing opportunities and dangers of technology, and India’s efforts to adopt green technology, to attract foreign investments in India, etc. As reported by the WEF, India will be the world’s fastest growing major economy in 2018 (source: International Monetary Fund).
According to the 21st survey of CEOs conducted by PricewaterhouseCoopers Private Ltd (PwC), a global consultancy Company, during August to November 2017, India has emerged as the fifth most attractive destination for investments from across the world, leaving behind Japan. The CEOs covered under this Survey included CEOs, primarily, from the following companies:
“The revenue of 40 per cent of the companies was at least $1 billion and 35 per cent of firms’ revenues ranged between $100 million and $1 billion. Around 20 per cent of the companies had revenues of up to $100 million while 56 per cent of the entities were privately owned.”
As per the Survey, the structural reforms that have taken place in India in the past one year, the efforts of the Government to address serious concerns like infrastructure, manufacturing in India, cyber security, climate change, etc may have positively affected the minds of global CEOs.
Although the global CEOs seem to have some concerns about investing in India, such cyber threats, terrorism, climate change, availability of key skills and recruits, exchange rate volatility, changing consumer behavior, threat of over- Government regulations and increasing tax burdens, etc.
But in the Meeting, Shri Narendra Modi had stated that investing in India, manufacturing in India has become easier because India has pledged to end License Raj, remove red tapism, etc, thereby inviting global investors to invest in India. He further stated that India is poised to become $5 Trillion Economy by 2025. Moreover, the Government of India has made the following efforts to encourage increased foreign investments in India:
- Reduced compliances and documentation for foreign investment in India,
- Further relaxation of foreign direct investment (FDI) norms in Single-Brand Retail Trading, Civil Aviation, Construction Development and Power Exchanges, and other FDI reforms,
- Implementation of Goods and Services Tax (GST) laws, whereby GST will subsume most of the existing multiple indirect taxes which may reduce the cost of tax compliance, logistics cost, transaction cost, etc and bring a stability and transparency in the tax regime making it easier to do business in India,
- Enactment of Insolvency and Bankruptcy laws, to consolidate and amend the laws relating to reorganisation and insolvency resolution of corporate persons, partnership firms and individuals in a time bound manner,
- Setting up of bodies/agencies such as the Securities Exchange Board of India (SEBI) to protect the interests of investors, to educate the investors to make informed investments, to address investor grievances, etc,
- Creation of an investor facilitation cell in ‘Invest India’ to guide and assist the investors during the entire life-cycle of the business, etc.
Therefore, the Government of India has relaxed FDI norms and introduced other reforms in its efforts to make foreign investment in India less complicated, and to make India the most attractive investment destination across the globe.