India Targets $100 Billion FDI Annually, Attracts China Hedge Investors

The ambitious objective contrasts with an annual average of over $70 billion in FDI over the past five years until March 2023, marking a reversal from last year's decline

Singh indicated that the current fiscal year's figure would be "approaching" the $100 billion target ( Image Source :Getty )

India is targeting a minimum of $100 billion annually in gross foreign direct investment (FDI) as it seeks to attract investors seeking diversification away from China, according to a senior official statement reported by Bloomberg. “Our target is that we will average at least $100 billion over the next five years. The trend is very positive and upward,” said Rajesh Kumar Singh, secretary in the Department for Promotion of Industry and Internal Trade.

The ambitious objective contrasts with an annual average of over $70 billion in FDI over the past five years until March 2023, marking a reversal from last year's decline. Singh indicated that the current fiscal year's figure would be "approaching" the $100 billion target.

The world's swiftest expanding significant economy is attracting businesses seeking to diversify their operations, a strategy often referred to as "China plus one," as a hedge against geopolitical tensions. Giants like Apple and Samsung Electronics have increased their manufacturing presence in India, leveraging incentives provided by Prime Minister Narendra Modi's administration.

However, foreign investment needs to catch up with the upsurge in local manufacturing. Singh attributed this discrepancy to elevated inflation and interest rates in developed countries, alongside geopolitical conflicts and perceived risks associated with emerging markets. 

In an interview on Thursday, he highlighted India's “unmatched market growth opportunity in a variety of sectors such as electric vehicles, electronic goods or general consumer goods, where penetration levels in our population is far lower than the global average." He pledged that the government would implement further measures to streamline FDI regulations.

Increasing the manufacturing sector's contribution to India's economy has been a pivotal pledge by Modi, who is vying for a third term in the upcoming elections commencing on April 19. Singh noted that the government's production-linked incentive (PLI) program has already spurred manufacturing growth and reduced India's reliance on imports, particularly in sectors such as telecommunications and auto components. He highlighted the surge in exports driven by emerging industries, including the production of at least 39 new medical devices in India.

Singh further disclosed that the administration intends to unveil multiple new industrial corridors, likely to receive approval within the initial 100 days of a new government. He conceded that progress under the incentive plan has been sluggish in the steel and textile sectors but mentioned plans to broaden the range of covered items.