Government Initiatives

The Government’s concerted efforts over the past few years to attract investments have yielded tangible results, underscored by the unprecedented volume of Foreign Direct Investment (FDI) inflow witnessed in the country during the fiscal year 2022. Notably, the government has implemented policies aimed at substantially streamlining the business environment, as illustrated by India’s remarkable ascent from the 142nd position in 2015 to the 63rd position in 2020 in the World Bank’s Doing Business Reports. Key policies contributing to this positive shift include:

India’s new rules for environmental, social and governance investments and ratings are likely to attract more investors to the nation’s US$ 1.4 billion market and serve as a model for other countries. Over the last two years, India has implemented many measures to regulate its market for green and other assets, most notably permitting domestic fund managers to create plans under six types of ESG strategies.
Securities and Exchange Board of India (Sebi) announced disclosure norms for foreign portfolio investors (FPIs) will come into effect from November 1st, 2023. Under these regulations, overseas funds that hold more than 50% of their equity investments in a single Indian corporate group or have more than Rs. 25,000 crore (US$ 3.01 billion) of equity assets under management (AUM) in the Indian market, will have to provide detailed information about their beneficial owners.

The Reserve Bank of India has taken a number of actions to increase foreign exchange inflows. These actions consist of:

Exempting additional Foreign Currency Non-Resident (Bank) [FCNR(B)] and Non-Resident (External) Rupee (NRE) deposits from Cash Reserve Ratio (CRR) and Statutory Liquidity Ratio (SLR).
Authorization for banks to accept new FCNR(B) and NRE deposits without regard to current interest rate regulations until the end of October 2022.
Inclusion of all new issuances of 7-year and 14-year G-Secs under the Fully Accessible Route (FAR) for FPls.
Exemption from the short-term limit for FPls' investments in G-Secs and corporate debt made until October 31, 2022.
Permitting FPI in commercial paper and non-convertible debentures with an original maturity of up to one year.
A temporary increase in the limit for external commercial borrowings (ECBs) under the automated route from US$ 750 million or its equivalent per fiscal year to US$ 1.5 billion.
Increase in the all-in cost ceiling under the ECB framework by 100 basis points, subject to the borrower having an investment grade rating.
Permission for AD Cat-I banks to use foreign currency borrowings made abroad to fund foreign currency loans to organisations for a variety of end uses other than exports.

The introduction of the Goods and Services Tax, easing liquidity problems of NBFCs and Banks, the reduction of corporate tax, improvements to the business environment, changes to the FDI policy, reduction in Compliance Burden, policies to support domestic manufacturing through public procurement orders, and the Phased Manufacturing Program (PMP) are just a few of the actions taken by the government to encourage domestic investments.
In the Budget 2023-24 session, it was informed that the Government has decided to continue the 50-year interest-free loan to state governments for one more year to spur investment in infrastructure and to incentivize them for complementary policy actions, with a significantly enhanced outlay of Rs. 1.3 lakh crore (US$ 16 billion).
The National Logistics Policy (NLP) aims to decrease the cost of logistics and make it to par with that of other developed nations. A comprehensive approach to address cost inefficiencies is being laid down by establishing an interdisciplinary, cross-sectoral, multijurisdictional framework for enhancing the entire logistics ecosystem. This would bolster India's economy, provide employment opportunities, and make Indian products more competitive in the global market. It was launched on September 17, 2022.
Foreign Exchange Management (Overseas Investment) Regulations, 2022 is an updated legal framework for foreign investment that offers simplification of the previous framework and has been adjusted to reflect the current dynamics of business and the economy. The "Ease of Doing Business" has been greatly improved with the addition of clarity about overseas direct investment and overseas portfolio investment, as well as the transition of numerous overseas investment-related transactions that are now under an automatic route that was previously under the approved route.
The Government of India increased FDI in the defence sector by liberalizing it to 74% through the automatic route and 100% through the government route.
The Foreign Investment Facilitation Portal (FIFP) is a new online single-point interface of the government for investors to facilitate Foreign Direct Investment proposals to evaluate and further authorize them under the Government approval route.
The sectoral cap for the pharmaceutical industry has been lowered, 74% of FDI is permitted in the Brownfield Pharma sector via the automatic method, and 100% is permitted via the approved route.
In the Civil Aviation Sector, 100% FDI is allowed under automatic route in Brownfield Airport projects.
For Single Brand Retail Trading, local sourcing norms have been relaxed for up to 3 years and 100% FDI is allowed under automatic route.

The Department for Promotion of Industry and Internal Trade (DPIIT) has introduced a dynamic reform exercise called the Business Reforms Action Plan, which ranks all the states and UTs in the country based on the implementation of designated reform parameters. The reforms have focused on streamlining the current rules and procedures and getting rid of unnecessary requirements and steps. The Action Plan covers multiple reform areas such as:

Investment Enablers
Online Single Window System
Land administration and Transfer of Land and Property
Construction Permits Enabler
Labour Regulation Enablers
Environment Registration Enablers
Inspection Enablers
Paying Taxes
Obtaining Utility Permits

The government has implemented an investor-friendly strategy to encourage FDI, and the majority of sectors are accessible to 100% FDI under the automatic route. In order to keep India a desirable and welcoming place for investors, the FDI policy is also revised frequently. Any changes to the policy are made after extensive consultations with stakeholders, including apex industry chambers, associations, representatives of industries/groups, and other organizations.
The National Monetization Pipeline (NMP) was launched in 2021 to provide a comprehensive view to investors and developers of the available investment avenues in Infrastructure. Over a four-year period, the total indicative value of NMP for the Central Government's core assets has been assessed at Rs. 6 lakh crore (US$ 75.18 billion).
The Union Cabinet set up Empowered Group of Secretaries (EGoS) and Project Development Cells (PDCs) in Ministries/Departments of the Government of India to expedite investments in conjunction with state governments, hence expanding India's pipeline of investable projects and attracting more FDI and domestic investments.
The Ministry of Labour and Employment has taken several steps to streamline labour laws to make conducting business easier. By condensing, combining, and rationalising the pertinent provisions of 29 Central Labour Laws, the Government has notified four labour codes: the Code on Wages, 2019, the Industrial Relations Code, 2020, the Code on Social Security, 2020, and the Code on Occupational Safety, Health, and Working Conditions, 2020.
In order to incentivise new domestic companies to set up their manufacturing units in India, the government has extended the concessional tax rate of 15% to March 31, 2024.
The government introduced the India Industrial Land Bank (IILB), which is a GIS-based portal - a one-stop repository of all industrial infrastructure-related information - connectivity, infrastructure, natural resources, terrain, plot-level information on vacant plots, line of activity, and contact details.
In February 2022, The Ministry of Heavy Industries notified a Phased Manufacturing Programme (PMP) to promote domestic manufacturing of electric vehicles, their assemblies/sub-assemblies, and parts/sub-parts/inputs of the sub-assemblies.
In September 2021, Minister of Commerce and Industry, Consumer Affairs, Food and Public Distribution and Textiles, Mr. Piyush Goyal, launched the National Single Window System (NSWS). The single-window portal would become a one-stop shop for investors for approvals and clearances, which would bring transparency, accountability, and responsiveness to the ecosystem.