FDI India is a start-up consultancy firm that helps Indian businesses connect with foreign investors for soft loans. BE’s Aritra Mitra interacted with Vishal Yadav, CEO & Founder, FDI India.
Q. How has the Covid-19 pandemic and the subsequent lockdown affected the FDI inflows in India?
A. The pandemic has resulted in several disruptions in the Indian business environment. But businesses also discovered new opportunities to escalate their business growth during this time. Given the current global sentiments, India continues to attract investments. Despite Covid-19, India received an overall of $35.37 billion worth of FDI in the April-August period of 2020 - higher than any other year. The projections of FDI inflows are even higher in the coming year.
Q. How do you think the Atmanirbhar Bharat initiative impacted FDI inflows in India?
A. Touted as the biggest initiative of the government, Atmanirbhar Bharat brought fresh waves in the FDI sector. The government’s intent through this initiative gave a boost to the manufacturing sector making India a leading manufacturing hub and the most preferred investment destination - resulting in significant returns on investment for businesses. The acceleration of the manufacturing sector is also creating job opportunities lifting the overall economy of the country and making it self-reliant.
Q. According to various industry insiders, the government should reframe the FDI laws. What is your take on this?
A. The presence of FDI-related laws becomes quintessential as the growth of FDI in a country like India is linked to specific characteristics that vary between countries, sectors and investments. In order to reduce the ripple effect of foreign companies’ profits from the country, countries like India should be able to refuse FDI as the same causes distortion in the domestic market and out-competes the local businesses. However, the country can extract maximum benefit from FDI by encouraging it where they expect to profit from foreign investors.
Q. In India, which sectors require the maximum FDI support and why?
A. We have seen a surge in the number of queries from the hospitality sector, which has been impacted severely by the pandemic. Keeping in mind that the hospitality sector is one of the key drivers of growth among the service sectors, the sector demands profound support from the government. Sectors like pharmaceuticals also require FDI support as due to the pandemic, there is an adverse impact on the manufacturing of active pharma ingredients. Thus, it has led to a huge opportunity for India as the developed countries are looking to shift the manufacturing base and India is turning up to be a preferred investment destination. Medium and Small Enterprises (MSME) also requires FDI support as the sector is dependent on traditional ways of credits and finance and requires other ways to finance such as through soft loans.
Q. Do you think that FDI will be instrumental in recovering from the economic slowdown in India? How?
A. I definitely think that FDI can help in combating the economic slowdown in India through debt as well as equity funding. FDI is not only a source of generating capital for businesses but it can also help the economy as a whole. Increased FDI boosts the manufacturing as well as the services sectors which results in job creation opportunities and equips the population with enhanced buying power. FDI as a financial instrument also ensures stable exchange rates which in turn mount an economy to be financially strong. With trends seen in FPI, FDI and the corporate bond market, India’s growth story will continue to expand.
Q. What amendments should the government make in FDI policies in order to take the maximum advantage of FDI?
The efforts taken by the government on the FDI front has definitely made India near to its far-fetched dream of becoming a leading investment destination. A supportive collaboration with developed countries can bridge gaps within the domestic system with a common goal and allow a free flow of investments to India. A robust and easily accessible FDI regime can help India to attain the position of a leading manufacturing capital as well as provide an alternative for the shaken value chains globally. India has the potential capacities to help turn around the dwindling economies affected by the Covid-19 pandemic.