Prime Minister of India, Shri Narendra Modi held a meeting on April 30 to develop a strategy to attract FDI, particularly foreign firms wanting to move out of China, to boost investment. In fact, the Indian government is reportedly in the process of identifying and developing 4.6 lakh hectares of land, including 1.1 lakh hectares of existing land in industrial areas, and planning fiscal incentives in the form of preferential tax rates, tax holidays etc in order to attract foreign firms. Further, a few state governments are also proactively working to capitalise on the opportunity.
The initiatives by the government are coming at a time when foreign companies are looking to shift their production base out of China and their home countries are facilitating the move. Japan has announced $2 billion worth of incentives and Korea is encouraging its firms to shift from China too. It is not surprising that approximately one thousand companies are in discussions with the Government to set up their production base in India. China has been the world’s factory for the last three decades mainly because of its FDI-led manufacturing exports. Almost 50 per cent of China’s growth comes from exports, creating millions of jobs.
Unlike the US, Italy, Spain and a few other countries, the COVID pandemic has, so far, not been severe in India in terms of both positive cases and fatality rate, if we normalise for the population. The initial stimulus package of Rs 1.7 lakh crore in March, followed by liquidity measures by the RBI and the stimulus package of Rs 20 lakh crore may help the Indian economy towards a vertical (V-shape) recovery. Therefore, post Covid, India could be the brightest spot among the emerging economies when it comes to attracting FDI. “Make in India” Campaign will become a success provided we prepare the ground and grab the opportunity.
India, the world’s fifth largest economy with an abundant labour force, offers the best alternative in terms of depth and size of the markets. With the median age of 27 and around 900 million “working-age” population, India is a young and aspiring economy.
India has progressively opened up sectors with hiked FDI equity to foreign investors under automatic routes. In recent years, there have been many proactive steps to facilitate foreign investors such as 24*7 online service to investors, response-query mechanism, proactive intervention with all the state governments, follow ups with all the Government departments, reduction in documents for exports-imports from 11 to three, the Insolvency and Bankruptcy Code, and the creation of country specific (such as Japan and Korea) desks among others.
Keeping all these points in mind it can be easily said that INDIA, currently, is the best place to start your business or further expand it. Setting up a legal entity to carry out business in India requires specialized expertise and an in-depth understanding of the Indian laws and this is where we at D. Batra & Co. can help you. Click here to know more.