New Delhi [India], September 22 (ANI): India should move beyond simply increasing foreign direct investment (FDI) inflows and focus on attracting investments that create technology, jobs, exports and domestic value addition, ASSOCHAM said in a working paper, recommending an FDI Quality and Impact Framework to assess the wider economic contribution of foreign investments.
The industry body proposed an FDI Quality Score that would assess investments on parameters including technology transfer and research and development, domestic value addition, employment and skills, exports, global value-chain integration, sustainability and regional development.
It said investments with greater economic impact could receive priority facilitation and faster approvals.
“The objective should be to move from simply attracting more FDI to attracting and retaining FDI that creates productive capacity, technology, jobs, exports and domestic value addition,” the report said, adding that the next stage of India's FDI policy should be about moving “from FDI scale to FDI impact.”
India's total FDI inflows rose from USD 4 billion in FY2000-01 to USD 95 billion in FY2025-26, while FDI equity inflows increased from USD 2 billion to USD 59 billion over the same period. Cumulatively, India received about USD 1.16 trillion in total FDI and USD 791 billion in FDI equity between FY2000-01 and FY2025-26.
However, the report said the focus now needs to shift towards the composition and economic impact of these investments. It noted that services and computer software and hardware together accounted for nearly USD 249 billion, or around one-third, of cumulative FDI equity inflows, while manufacturing investment has supported production, supply chains and exports.
The report identified regulatory uncertainty, delays in project implementation, dispute resolution and weak linkages between foreign-invested companies and Indian firms and MSMEs among the key challenges.
It said the existing single-window system should evolve into a “single process”, allowing investors to submit information once, track approvals through a common dashboard and receive time-bound decisions.
Further, ASSOCHAM also called for stronger investor aftercare to encourage reinvestment, deeper technology and R&D linkages, wider geographical distribution of FDI and more ready-to-invest industrial infrastructure. It said India needs to make the investment environment more predictable while reducing the time and cost of setting up and expanding businesses. (ANI)
India should prioritise high-impact FDI with jobs, technology and exports: ASSOCHAM
