Investing in the Future
Invest India is a Joint Venture Company between the Government of India, the Department of Industrial Policy and Promotion, and the Federation of Indian Chambers of Commerce and Industry. As such, Invest India takes charge of promoting and facilitating Investments to India. WIth the country's fastest growing economy, Invest India seeks to keep investors in the know and faciliate as a partner for future ventures. Mrs. Issar-Ernst, Senior Director at the Federation of Indian Chambers of COmmerce and Industry (FICCI), tells us a little more about the venture's favorable prospects.
GSC: Since 2007, India has continuously ranked among the top ten investment destinations worldwide for foreign investors. As India's official agency dedicated to investment promotion and facilitation, how does Invest India support foreign direct investments in the country?
Mrs. Issar-Ernst: Invest India is the National Investment Promotion and Facilitation Agency of the country, set up as a not for profit joint venture between the Department of Industrial Policy and Promotion, Ministry of Commerce & Industry, Government of India, Federation of Indian Chambers of Commerce & Industry and State Governments of India.
The organisation assists both foreign and domestic investors to set up their businesses in India. We offer a wide range of services to investors that include pre-investment research, consultancy services, site identification, expediting of approvals and arranging meetings with government officials in all Departments. We also provide aftercare services such as highlighting investor concerns to the relevant government authorities in order to make it easier to do business in India. Overall, Invest India hand holds investors through the entire investment life cycle.
GSC: In the past, India chose to focus on the domestic economy and grew at a slower pace than its Asian rivals with an emphasis on the service sector rather than manufacturing and exports. But the country has experienced a shift in recent years. Generating nearly 8% economic growth per annum since 2003, India has become one of the fastest growing economies in the world. Since Invest India was created, how have you seen foreign investment activity change, especially in regard to the manufacturing and service sectors, and how does the agency adapt to and encourage those changes? How do you foresee the Indian manufacturing and service sectors evolving in the coming years?
Mrs. Issar-Ernst: Since the launch of ‘Make in India' in 2014, there has been a dramatic change in foreign investment coming into India. In the last year, FDI into India increased by 48% to USD 31 billion, of which manufacturing accounts for 46% of it. This rise in FDI was because ouf 2 measures: ease of doing business and liberalizing key sectors. Under the ‘Make in India' campaign, the Government has taken many measures to simplify regulations and overall, make it easier to do business in India. An example would be the ‘eBiz portal' that allows investors to obtain 14 permits online. Also, the liberalization of key sectors with large business opportunities has attracted investors who were previously unable to invest in sectors such as defence, railways, construction, road & highways and ports.
To adapt to the surge of FDI, the Indian Government partnered with key investor countries to fast track and facilitate their investments into India. One such example would be Indo-German ‘Make in India Mittelstand' initiative that was created to assist and facilitate the market entry of ‘Mittelstand' companies into India, who innovate cutting edge technology. Similarly, ‘Japan Plus' and ‘Korea Plus' were also created to facilitate and fast-track Japanese and Korean investments into India.
More importantly, the further rationalization of regulations will be biggest galvanizer of FDI into India. The simpler, more transparent regulations will transform India into an even better an investment destination and a global manufacturing hub. These measures are a part of the vision of the Hon'ble Prime Minister for India's Ease of Doing Business Ranking to be in the top 50 by 2020.
GSC: India has been long revered globally for its strengths in the IT and electronics industries, as well as in the service sectors. Are there any other industries at the moment that appear to be especially rewarding for foreign investors? If so, which industries and what makes them particularly attractive?
Mrs. Issar-Ernst: Each one of the 25 sectors in the ‘Make in India' campaign has done tremendously well. The success of each sector has not only been a result of streamlining regulations, but moreover the stabilizing political climate of India that has made the Indian market more predictable, and therefore easier to do business. After the landslide national election in 2014, it was evident that people of India had given a clear mandate to the newly formed government to focus on development and jobs creation. The willingness to do business in India has drastically improved.
Some sectors have taken the initial lead as a result of demand and supply side factors. These factors are India's large domestic market, low cost raw materials, low cost labour and pre-established supply chains in the country. These factors have made India an attractive market in sectors such as automotive, renewable energy, construction, roads & highways, railways, ports, defence and food processing.
Moreover, ‘Digital India', is the Hon'ble Prime Minister's vision to transform the electronics sector of India from from an import dependent sector to a zero net import sector by 2020. Traditionally, 89% of all electronics products manufactured in India are low value add products and in order to meet the target of zero net import, the Government is very keen to establish the entire electronics supply to chain to India. Very Attractive opportunities await India's electronics sector that is projected to grow to USD 400 billion by 2020.
GSC: Thank you very much for this Interview, Mrs. Issar-Ernst