With the monetisation plan in action, India can be assured of growth, and new opportunities.

Deepak Bagla

Managing Director & CEO, Invest India

India has set on a journey to become a USD 5 trillion economy by 2025. How will the initiatives announced by the government like Make in India, Startup India, Aatmanirbhar Bharat, Bharatmala, Sagarmala, etc. drive India on this growth?

India is a remarkable story of 21st century. It is a powerhouse of innovation, solutions and manufacturing. We service the global economy with our excellence and leadership in numerous industries. We are creating innovative solutions not just for ourselves, but also for the entire world. The Covid-19 pandemic showcased the strength and resilience of our MSMEs, startups and business community.

Young Indians came out with smart solutions to address the health crisis. They were joined in their efforts by union ministries and established industrial leaders who, in a short time, were able to not only increase India's PPE production capacity (making it the second largest in the world) but also meet the shortfall in our ventilator capacity. Indigenous solutions, often crafted from entirely domestically procured items, highlighted India's capabilities and its will to strive towards a goal of self-sufficiency. 'Aatmanirbhar Bharat' is a testament to and a celebration of these capabilities. Providing domestic industries an impetus to manufacture locally instils confidence, boosts employment and revenue in circulation within the country.

'Aatmanirbhar Bharat' compliments the 'Make in India' programme that has also made India a leading global destination for foreign direct investment (FDI). Even amidst a pandemic that halted the global economy, India recorded the highest FDI inflows ever. While global FDI declined by 42 per cent last year,  FDI received by India grew 10 per cent, to USD 81.97 billion. India also improved its ranking to #5 among the highest FDI recipients in the world. In the first quarter of this financial year, India has received total FDI (equity inflows) of USD 17.57 billion, marking an increase of 168 per cent year-on-year. Make in India is boosted by the extensive production linked incentive (PLI) scheme of the government that was extended to 13 crucial sectors last year.

Meanwhile, India's startup ecosystem is a thriving example of an unprecedented transformation—both in scale and pace—ever seen in the free world. The startup movement is vigorously growing from every home, every village and every district. Indeed, of the country's 739 districts, more than 600 have at least one registered startup.

The combination of these ambitious programmes has driven investor faith in India and its business potential. Invest India is at the forefront of how the Indian business ecosystem is perceived globally and has been able to mark the success of these campaigns that have generated much interest and brought more investment to India.

How has the investment scenario in India changed in the last decade (2001-2020)? Which sectors have seen investments flowing in in a big way? Can you please share some data on this?

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.

Further more, the government has taken multiple steps to enhance the qualitative experience of investors in India. India's rank in ease of doing business has seen a drastic growth, up from 142 in 2014 to 63 in 2020 on the back of sustained efforts by the present government to bring business reforms in crucial sectors. The single window clearance system will combine onto a single platform, the various approvals and clearances required of a business to begin operations in India. The one stop digital platform will integrate all line ministries, clearance agencies and departments in one single IT portal that will encompass a single common application form. Late last year, the government set up project development cells (PDCs) in ministries to maximise foreign investments and build robust data around incoming investments and opportunities in the future. The focus on the investor's journey in India has made it among the leading business destinations of the world.

The FDI of USD 81.73 billion was received across 63 sectors. This includes sectors like agricultural machinery, education, retail trading, software and hardware, manufacturing, information and communication technology, chemicals, hotels and tourism, commercial and household equipment, automobiles, and drugs and pharmaceuticals, among others. The government's production linked inventive (PLI) schemes that now cover 13 crucial sectors will impact the distribution of FDI inflows that provide an impetus to domestic manufacturing across segments like electronics components, pharmaceutical drugs, solar PV cells, automobiles and auto components, specialty steel and telecom, among others.

How do you assess the impact of the stress in various sectors (power, steel, etc.) on the investment from private players?

The Nomura India Business Resumption Index (NIBRI) rose to 102.7 at the end of August 2021. The base for the index is pre-Covid which reflects a positive recovery for India. By all measures, India is recovering from Covid at a rapid pace. The increased demand for power and steel right now is, in fact, a positive indicator of India recovering from Covid-19! Industries have increased their production to meet pent up demand from last year. This is driving demand for power which, in July, returned to pre-pandemic levels, increasing 12 per cent to 125.51 billion units. Steel production in India has also increased because we have emerged as a favoured exporter for the raw material as global markets have looked to diversify their supply lines. In a few months, the supply chains will adjust to this increased demand, thereby, positively impacting the sector and its investment potential. For potential investors, this is a good time to set afoot in India's booming market.

How do you see startups revolutionizing investments in India?

India has the third largest startup ecosystem in the world. It is home to over 54,000 startups across 56 industries. Leading sectors include IT services, healthcare and life sciences, education, and professional and commerce services. While startups have already made a mark in traditional sectors, new areas such as Indic languages, robotics, nanotechnology, etc. will soon start witnessing similar disruption. Startups have tremendous impact in society by improving ease of living, creating large scale employment, and even enhancing the delivery of public services. One of the key reasons for this booming ecosystem has been the steady flow of funding for startups.

In the first half of 2021, there were 543 startup funding deals totalling USD 10.15 billion, as compared to 881 deals worth USD 9.95 billion in 2020. Additionally, this year startups raised almost double of what was raised in the first half of 2020 (USD 4.85 billion) and surpassed the total funding raised in 2020. At present, India has 63 unicorns with a total valuation of USD 218.2 billion, including the 26 unicorns born in 2021. It took us 10 years to create 37 unicorns and another 8 months to create the next 26 unicorns!  This year, one in every 10 unicorns around the world is born in India.

The startup ecosystem in India has proved its strength and will continue to revolutionize investments by constantly innovating, solving key societal and economic issues, as well as creating opportunities for economic growth.

Most of the start-ups are into the services business. What measures need to be taken to encourage start-ups to get into the manufacturing sector, especially at a time when the government is expecting the contribution of manufacturing industry in GDP to grow to 25% from the current 15% and also to become self-reliant?

Given that manufacturing is a high growth space in India, it is critical to attract participation of innovative startups in this sector. Collective support showcased by the government and industry will go a long way in making this vision into reality.

Some measures that shall encourage startups to get into the manufacturing sector include:

• Industry is collaborating with startups by extending funding, pilot opportunities, business projects, incubation and acceleration support, co-development avenues, etc. Increased focus is needed on R&D collaborations, co-developing components/products, and adopting Made in India startup technologies for manufacturing.
• It is also imperative to foster stronger MSME-Startup collaborations. While startups will gain more business in the local markets, local MSME clusters will also be able to reap the benefits of innovation.
• 'Startup India' initiative provides various benefits to DPIIT-recognised startups that are very relevant for manufacturing sector startups as well. Some key incentives include:
• Startups can self-certify their compliance under six labour and three environment laws for a period of three to five years from the date of incorporation.
• Central ministries, departments, and public sector undertakings are mandated to relax prior turnover, prior experience, and earnest money deposit requirements in public procurement for startups. DPIIT-recognised startups can also get listed as sellers on the government's largest e-procurement portal, Government e-Marketplace (GeM). These provisions have the potential to give a major boost to B2G manufacturing startups.
• Startups are eligible for 80 per cent rebate in patent filing fees and 50 per cent on trademark filing fees. They can avail expedited examination of patent applications to reduce the time taken in granting patents. 510 patent facilitators and 392 trademark facilitators have been empanelled (as of March 2021) under this scheme to provide free-of-charge services to Startups. These are beneficial for startups innovating designs, processes, or inventing newer technologies for manufacturing.
• The provisions of section 80-IAC of the Income Tax Act provide for a deduction of an amount equal to 100 per cent of the profits and gains derived from an eligible business by an eligible startup for three consecutive assessment years out of 10 years, at the option of the assessed, subject to certain conditions. Startups incorporated on or after 1st April 2016 but before 1st April 2022 can apply for income tax exemption.
• With an outlay of Rs 945 crore, Startup India Seed Fund Scheme shall provide financial assistance to startups for proof of concept, market entry, and commercialization. It will support an estimated 3,600 entrepreneurs through 300 incubators in the next 4 years. The availability of this seed funding shall encourage startups to venture into capital-intensive manufacturing.
• Atal Innovation Mission under NITI Aayog has set up 59 Atal Incubation Centres and supported nine established incubation centres across the country, many of which focus on supporting manufacturing startups. Incubators provide critical mentorship and resources to entrepreneurs at their early stages, enabling them to set up and scale their businesses.

Can you share your views on the National Monetisation Pipeline and its success?

Realising India's potential for growth is entwined with enhancing its infrastructure capabilities. This has been widely recognised by the government of Prime Minister Modi that is also investing in the sector. The Union Budget 2021-22 allocated a whopping Rs 5.54 lakh crore towards capital expenditure, a significant rise from the Rs 4.39 lakh crore allocated in the previous budget. National Infrastructure Pipeline (NIP) was also expanded to 7,400 projects. Already, 217 projects worth over Rs 1 lakh crore have been completed under NIP.

The National Monetisation Pipeline is yet another vessel for increasing investment into infrastructure development in India. The inflow of private capital into brownfield projects will be a breath of fresh air in India's most established sectors like railways, power, warehousing, seaports and airports, pipelines and telecom. Over the four-year period in which the NMP will be active, India can be assured of growth, new opportunities, and increased access in its infrastructure sector.

Tell us about the journey of Invest India, the start-up of the government, so far and how it has been instrumental in changing the business environment despite the challenges of the Covid pandemic.

Invest India is a startup of government of India came into shape in 2015. At present, we are facilitating over USD 157 billion in indicated investments and have handled nearly 207,000 business requests across 109 countries. This has created an actual investment of USD 30.82 billion and over 320,000 employment opportunities. In so doing, Invest India has been recognised for setting the gold standard for investor facilitation and handholding. Our greatest strength is the pace with which our team responds to incoming queries which has considerably eased investor fatigue. We upheld this trait during the lockdowns in 2020 and this year.

A key element of Invest India's portfolio is investment promotion, especially for 'Make in India' and 'Startup India' initiatives. To promote investments in India, our team hosted companies and officials and travelled extensively themselves. When Covid-19 struck, we quickly moved to the digital space. Our first project to ease investor concerns was the Business Immunity Platform (BIP) that was designed as a comprehensive resource to help businesses and investors get real-time updates on India's active response to Covid-19. This platform updates constantly and keeps a regular track on developments with respect to the virus, provides latest information on various central and state government initiatives, gives access to special provisions, and answers and resolves queries through emails and on WhatsApp.

We also hosted “Exclusive Investment Forums” that were online government-to-business summits where government officials could present sector opportunities to investors seeking a deeper understanding of Indian markets. Despite the challenges of the pandemic, the vigour of the team has remained high and has been well appreciated, both by the industry and government alike.

All these efforts have been acknowledged globally by the World Bank, the World Association of Investment Promotion Agencies (WAIPA) and the United Nations Conference on Trade and Development (UNCTAD), among others. We have been the recipients of multiple awards, most recently we were recognised as the world's most innovative Investment Promotion Agency 2021 by OCO Global. On this path for greater recognition of Brand India, we are sure to mark newer milestones.

What is your vision for Invest India in the near future and how do you foresee investments coming?

Invest India's success can be attributed to India's attractiveness as a business destination. Our market factors—nearly a billion strong skilled and talented workforce, business friendly policies, geographic location and internet connectedness, among others, have primed the country for immense growth. Invest India remains committed to realising this potential by working closely with global partners and the government, to resolving issues to further streamline investments and enable India's innovation and startup potential. Invest India is and shall continue to be a trustworthy and reliable business partner at the disposal of all companies in any ensuing issues they might face while conducting their operations in India. We want to leverage our unique position in the government-business hierarchy to help realise India's inherent potential.

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