17 Oct , 2022 By : Monika Singh
India’s focus on reforms and economic growth will result in foreign direct investment (FDI) of $475 billion in the next five years as most multinational companies (MNCs) see India as an attractive investment destination for their global expansion, according to a new report.
The optimism is driven by both short-term prospects — a majority of MNCs feel that the Indian economy will perform significantly better in three to five years — and in the long term, with 96% of respondents being positive overall about India’s potential, according to a report released by EY-CII, titled ‘Vision – Developed India: Opportunities and Expectations of MNCs’.
MNCs appreciate the impact of GST, the government’s digital push in various spheres, and transparency in taxation, among other reforms.
FDI in India has seen a consistent rise in the last decade, with FY22 witnessing an FDI inflow of $84.8 billion despite the impact of the pandemic and geopolitical developments on investment sentiment.
“India is seen as an emerging manufacturing hub in global value chains, a growing consumer market, and a global leader in the digital transformation of government and private sectors alike. Our report captures the MNCs’ perspective on steps that government must take and policy measures that will power the next leap of economic development. Additionally, it also shares industry views on initiatives that will lead to the decarbonisation of India’s economy to further boost its sustainability efforts,” Sudhir Kapadia, partner, tax & regulatory services, EY India, said.
The report also reveals that MNCs expect momentum on faster execution of infrastructure projects, ease of doing business, tax reforms and implementing trade agreements. Also, MNC investors in sectors such as automotive, IT/ Information Technology Enabled Services (ITES), chemicals and plastics, have been appreciative of the PLI scheme offered by the government that aims to encourage domestic manufacturing.
According to the survey, top expectations from the government include continuing reforms to enhance ease of doing business, faster implementation of infra projects, early closure of free trade pacts and GST reforms.
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