In a bid to make India an attractive investment destination, the Indian government has taken a slew of foreign direct investment (FDI) measures. The center cleared FDIs in contract manufacturing, single-brand retail, insurance, and digital media, hoping to increase the FDI inflow into the country. Needless to say, the steps will improve the current growth situation in the country and usher in relief. But, as per experts there is room for more such announcements.
In a bid to discuss the reforms and outline a vision on what more needs to be done, PwC in association with CNBC-TV18 recently held a discussion on FDI reforms and tax incentives, during which experts Ramesh Abhishek, former secretary, Department of Industry Policy and Promotion; Jayant Dasgupta, former DTO ambassador; and Akash Gupt, partner and leader-regulatory services, PwC India, spoke at length about FDI, corporate tax, and job creation.
Speaking about the favorable corporate climate and how much India stands to gain, Abhishek said the FDI move will put things in perspective. Many of these FDI changes that have been done in the last few months were in the works for some time and last of the FDI reforms done by the government in the last few years have been done on feedback. He believes that the government has been responding to many of these (suggestions), and all these put together actually create a conducive environment.Coupled with reduction in the corporate tax, the FDI changes can be a potent weapon to improve the inflows. Talking about the changes, Dasgupta welcomed the move, saying the country had to be at par with other nations, such as Vietnam, to truly unlock growth opportunities. There are many things, which need to be done in the domestic arena, and those are the things which we need to focus on now, including labor reforms, allotment of land, less of inspection and more of self-compliance, then electricity rates, and logistics and clearances at the customs.
Meanwhile, the experts discussed about the need for FDI in the electronics sector, providing electronics packages like Vietnam does, fast policy changes, making India a hub of electronics exports, incentives for domestic production in electronics, and more. Besides, they also touched upon champion sectors that needed to be addressed.
Despite India having advantages to attract investment in terms of demographics, cost, right location, the industry needs to harness the right set of incentives and guidelines as investors are still looking at India and sitting on fence actually to invest or not. The focus should also be more on the component segment, if the OEMs are really wanted to bring in and any kind of help in components will definitely bring down the whole price in the cost segment and backward integration of the entire supply chain.
During the deliberations, the industry heads spoke about stable regulatory, tax environment, and how to communicate the same to attract interest.