Sashakta Bharat

India is at the cusp of a growth cycle and is targeting to become a USD 5 trillion economy by 2025. Prajakta Karnik takes a peek at the readiness of India to become a global superpower.

"Jahaan daal daal par sone ki chidiyaan karti hain basera woh Bhaarat desh hai mera".

These are not just the lyrics of a famous Bollywood movie, but a true depiction of India. India is not only rich culturally, but it is the most enviable investment destination on the global map. India has been making strides since the time it came out from the shackles of slavery. In the last two decades, especially, the "interest" in India's growth story has grown phenomenally, thanks to the initiatives taken by the governments to open up the doors of progress to the world. As a result, from "Emerging Economy", India is now recognised as "Preferred Investment Destination"

Today, India is at a very strategic inflexion point of greater economic prosperity. India has already started treading the path of economic reforms has transformed it to one of the world's fastest growing large economies. Infrastructure has been one of the cornerstones in the development of the country with exponential growth over the past decade. 

In the past decade, India has invested over USD 1.1 trillion in building infrastructure. The strategy of the country had been to build core infrastructure for easing logistical movement, increasing energy capacities to ensure high quality uninterrupted power supply to businesses and invest in connectivity to ensure that the 1.3 billion people are connected to each other through mobile connections and high-speed internet. This has been achieved through a very interesting mix of Public Private Partnerships and private investments in feasible infrastructure investments and budgetary investments in non-feasible but high social return projects.

According to a report by IBEF, Foreign Direct Investment (FDI) has been a major non-debt financial resource for the economic development of India. Foreign companies invest in India to take advantage of relatively lower wages, special investment privileges like tax exemptions, etc. For a country where foreign investment is being made, it also means achieving technical know-how and generating employment.

The Indian Government's favourable policy regime and robust business environment has ensured that foreign capital keeps flowing into the country. The Government has taken many initiatives in recent years such as relaxing FDI norms across sectors such as defence, PSU oil refineries, telecom, power exchanges, and stock exchanges, among others.

According to the Department for Promotion of Industry and Internal Trade (DPIIT), FDI equity inflow in India stood at USD 529.63 billion between April 2000 and March 2021, indicating that the government's efforts to improve ease of doing business and relaxing FDI norms have yield results. FDI equity inflow in India stood at USD 59.64 billion between April 2020 and March 2021. Data for 2020-21 indicates construction (infrastructure) activities attracted inflows of USD 7.88 billion. The country has received the highest FDI equity from Singapore, the US, Mauritius, the UAE, Cayman Island, the Netherlands and the UK in the last one year. Interestingly, Gujarat, Maharashtra, Karnataka and Delhi  have received the highest during the last fiscal.

These investments are largely backed by the initiatives announced by the Prime Minister Narendra Modi-led government in the last few years to open up the gates for foreign investments. Almost all the major sectors have been opened up for private investments, be it roads and highway, railways, aviation, defence, etc.

QUOTE

If you are looking to invest in urbanisation, India has exciting opportunities for you. If you are looking to invest in mobility, India has exciting opportunities for you. If you are looking to invest in innovation, India has exciting opportunities for you. If you are looking to invest in sustainable solutions, India has exciting opportunities for you. These opportunities come along-with A vibrant democracy. A business-friendly climate. A huge market. And a government which shall leave no stone unturned to make India a preferred global investment destination.

Narendra Modi

Prime Minister, India

The asset monetisation, based on the philosophy of 'creation through monetisation', is aimed at tapping private sector investment for new infrastructure creation. This is necessary for creating employment opportunities, thereby enabling high economic growth and seamlessly integrating the rural and semi-urban areas for overall public welfare.

Nirmala Sitharaman

Union Finance Minister, India 

BOX

Booster Dose For Investments

National Infrastructure Pipeline (NIP): A group of social and economic infrastructure projects in India over a period of five years with an initial sanctioned amount of Rs 102 lakh crore

Bharatmala Pariyojana: A centrally-sponsored and funded road and highways project of the Centre. The total investment for 83,677 km committed new highways is estimated at Rs 5.35 lakh crore.

Sagarmala Programme: A flagship programme of the Ministry of Shipping to promote port-led development in the country by exploiting India's 7,517 km long coastline, 14,500 km of potentially navigable waterways and its strategic location on key international maritime trade routes.

Namami Gange Programme: An integrated conservation mission, approved in June 2014 with budget outlay of Rs 20,000 crore to accomplish the twin objectives of effective abatement of pollution, conservation and rejuvenation of National River Ganga.

Jal Jeevan Mission: A program aimed at providing water supply in all 4,378 urban local bodies with 2.86 crore household tap connections, as well as liquid waste management in 500 AMRUT cities and will be implemented over 5 years, with an outlay of Rs 2.87 lakh crore.

Production Linked Incentive: To boost manufacturing in India, the finance minister announced the scheme with an outlay of Rs 1.97 lakh crore for 5 years starting this fiscal.

Gatishakti: Prime Minister Narendra Modi announced the launch of Rs 100 trillion national infrastructure plan that will help generate jobs and expand use of cleaner fuels to achieve the country's climate goals.

Swacch Bharat Mission 2.0: With an outlay of Rs. 1.41 lakh crore, the focus is on sludge management, waste water treatment, source segregation of garbage, and reduction in single-use plastics and control of air pollution by waste management in construction and demolition, and bio-remediation dump sites.

UDAN  Scheme: A key component of the National Civil Aviation Policy (NCAP), the objective is to establish an integrated ecosystem which will lead to significant growth of civil aviation sector and in turn promote tourism, increase employment and lead to a balanced regional growth.

National Monetisation Pipeline: Initiative estimates aggregate monetisation potential of Rs 6 crore through core assets of the Central Government, over a four-year period, from FY 2022 to FY 2025.

InvITs/ REITs: Innovative vehicles that allows developers (public and private) to monetise revenue-generating infrastructure/ real estate assets, while enabling investors or unit holders to invest in these assets without actually owning them.

Experts Speak

Within 60 short months, India has climbed from being the 10th largest economy in the world to the fifth-largest today. The USD 3 trillion economy today is on its way to be USD 10 trillion by 2030, an objective set by Prime Minister Narendra Modi. Major structural reforms have enabled a fast-paced growth in the country. The government of India has liberalised the FDI regime, opening many sectors to 100 per cent FDI through the direct route. This includes sectors like agriculture, mining, renewable energy, civil aviation, pharmaceuticals, railways, and e-commerce, among others.

Deepak Bagla

Managing Director & CEO, Invest India

Contrary to world opinion, the Indian economy better placed to rebound. The government is making all efforts to bring the economy back on track. India has attracted total FDI inflow of around USD 81 billion in FY21 which is a record and an increase of around 10% YoY. India is the fifth largest recipient of inflows in the world. The current government has always stressed on ease of doing business, and with the removal of retrospective taxation, the government is walking the talk in creating an environment that will surely attract more FDI's into the country. The road ahead is looking a lot more constructive. With the waning of second wave and lockdown restrictions being progressively eased, there are definite signs of pick-up in economic activity.

SN Subrahmanyan

Managing Director & CEO, L&T

India's economy in the next five years will be driven by manufacturing growth on the back of a strong economic recovery, led by rapid urbanization due to mass migration into cities. India's construction sector is expected to be the third largest in the world after China and US, with an overall value of USD 1 trillion by 2025. Apart from the planned federal capital expenditure, the central government has also committed USD 27.4 billion to states and autonomous bodies for capital expenditure in their respective areas. So, we can foresee a significant rise in construction activity in the near term. The central government's plan to build 100 Smart Cities and rejuvenate 500 others under AMRUT backed by a budget of Rs 98,000 crore is also expected to give a huge boost to this sector.

Rahul Sharma

CEO – Aluminium Business, Vedanta

I believe that more than Foreign Institutional Investments, FDI will play a much larger and meaningful role for developing our economy, ensuring employment growth and strengthening the overall fundamentals of the economy. So, we need to look at it from that angle. Other than that, we need to see that the greenfield investment in India are still regarded as very risky by the private sector. Therefore, it is necessary that the private sector is given the necessary confidence to ensure and enable investments in greenfield.

PR Jaishankar

Managing Director, IIFCL

Way Forward

According to ratings agency ICRA, the initiatives announced by the government under its asset monetisation plan is expected to garner healthy response as many large global investors already have some presence in the Indian infrastructure sector.

A report by CII and EY has stated that India is expected to attract foreign direct investments (FDI) of USD 120-160 billion per year by 2025. Over the past 10 years, the country witnessed a 6.8% rise in GDP with FDI increasing to GDP at 1.8%. Stepping up the pace of infrastructure investment will be crucial given the multiplier effect it would have on the overall economy. The success of these initiatives and the completion of NIP would remain key to achieve the USD 5 trillion economy vision by 2025.

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