India to streamline investments with eyes on China-plus-one

Thanks to global supply chain diversification and a series of incentive policies aimed at wooing investors, FDI inflow into India has increased rapidly during the past years. India is keen to further improve its attractiveness by streamlining the investment process and reducing red tape.

An unnamed Indian government official told The Economic Times that an inter-ministerial meeting was held a few days ago, with attendees looking to streamline the investment process when figuring out why some incentive policies outperform or underperform others.

For the past two years, India has launched 14 Production Linked Incentive (PLI) schemes covering mobile phones, low-emission automobiles, battery cells, solar panels, notebooks, etc., to encourage manufacturers to set up plants in India. Still, some PLI schemes, such as mobiles, electronics components, and pharmaceuticals, were announced a year earlier than others and are ahead of the progress of other PLI schemes. The PLI scheme for the food process is progressing fast because of quicker approvals, while investment in specialty steel, another PLI scheme, takes time.

Besides, Bloomberg reported in October that India launched a US$1.2 trillion plan called PM Gati Shakti aimed at offering investors and companies a one-stop solution for the design of projects, seamless approvals, and easier estimation of costs.

India is keen to seize the time window when China is implementing strict COVID policies, and US-China technology tension plagued global suppliers to diversify their production bases.

According to UNCTAD's World Investment Report 2022, despite FDI inflow declining from US$64 billion in 2020 to US$45 billion in 2021, 108 new international project finance deals were announced in India in 2021, compared with 20 projects on average for the last ten years.

Meanwhile, according to the World Bank's Ease of Doing Business Ranking 2020, the latest available report as World Bank discontinued it in 2021 due to data irregularities, India, ranking 63rd, was one of the top 10 improvers and improved from 130 to 63 in just three years.

Still, Anshuman Sinha, a partner at Kearney India, told Bloomberg that in addition to geopolitical reasons, the only way for India to compete with China is to be competitive on the cost.

Source: UNCTAD, compiled by DIGITIMES Asia, June 2022