FDI can catalyze economic stability, says corporate lobbyist Deepak Talwar

Recently, Reuters conducted a poll of economists, which suggests the Indian economy may be in contraction mode till the end of 2020. While effective lockdown strategies managed to save countless lives, the same cannot be said for the Indian economy. The broken market mechanism, loss of consumer trust, competition from online sellers, and the Chinese tussle have combined to slow down economic stability and growth. However, this can change.

Corporate Lobbyist Deepak Talwar says, “Foreign Direct Investment has always been at the heart of the economic engines. In FY 2019-20, India registered an 18% increase in FDI. Although the FDI rules were recently tweaked to avoid opportunistic takeovers by foreign entities, it is just a preventive measure to tackle international soft power influx. Companies from all over the world have appreciated the liberal business environment and cheap labour in India. Google for India Digitisation Fund is a classic example, which promises investment worth $10 billion over the next 5-7 years through various channels.“

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Numbers are in tandem with Deepak Talwar’s insight. Recently, Amitabh Kant, CEO, Niti Aayog revealed that India attracted FDI worth $22 billion alone from the United States during the pandemic. This comes after leading names such as Google, Facebook, Amazon, and Foxconn flushed money in the Indian market. Both countries hold high potential to fill the gaps created through their shared sentiment of Chinese boycott. Owing to this, India has jumped about 79 positions in the World Bank’s ease of doing business index.

Economic growth can see the day’s light with improving ease of business index. USA, New Zealand, Middle East, Russia, and Australia carries heavy investment potential, which can be converted into an opportunity with India’s market. As the aforementioned countries look forward to breaking the net of China’s soft power, a quid pro quo mechanism between them might help in shifting the global scales of power.

Furthermore, this is a viable possibility. According to Investment Trends Monitor’ published by The UN Conference on Trade and Development (UNCTAD), India gained 16%, roughly $7 billion, FDI when the global FDI remained almost flat. The combination of cheap labor, less paperwork, favorable policies, and unconditional support from the current government projects India in a positive light for increasing FDI quotient. Currently, India is the 9th largest recipient of FDI and holds the top five position of host economies in developing Asia region.

Indian economy can look forward to stability and subsequent growth with the double-sided sword of FDI and Vocal for Local. While India offers one of the most liberal environments for FDI across the globe, the market continues to ride the tide of government initiatives such as Make in India so as to inculcate a notion of consumer trust and demand recovery.