In response to a sharp 98.4% year-on-year fall in net foreign direct investment (FDI) inflows in May, the Indian government has prepared a multi-ministry action plan aimed at reviving investor sentiment and boosting capital inflows.
According to government sources, the Finance Ministry and the Department for Promotion of Industry and Internal Trade (DPIIT) will jointly lead the initiative, supported by key sectoral ministries. The coordinated effort aims to ensure that investor confidence is not left to the responsibility of a single ministry, acknowledging the complexity of foreign investment dynamics.
Key Highlights of the Plan:
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Regular Engagements with Global Investors: The government will conduct structured interactions with foreign investors to directly understand and address their concerns.
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Simplification of Procedures: Measures will be taken to further streamline approval and clearance processes.
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Ease of Compliance: The plan includes reducing regulatory burdens to make India a more attractive investment destination.
An official stated, “The finance ministry will work with DPIIT… there’s a need for concerted action,” emphasizing the collaborative nature of the plan.
This initiative comes amid concerns over India’s FDI performance, particularly after a drastic decline in May. Though temporary factors may have contributed to the fall, the government is keen on building a long-term investor-friendly environment.
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Why It Matters:
India has been positioning itself as a global manufacturing and services hub. A sustained drop in FDI could impact economic growth, job creation, and technological advancement. The new action plan is a proactive move to reassure global investors of India’s commitment to transparency, ease of doing business, and policy stability.
The steps being taken are in line with broader economic goals, including ‘Make in India’, and could help restore investor confidence if executed effectively.
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