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As one of the fastest-growing economies in the world, India stands at a crucial junction of major policy, economic, and socio-political transformations. Recent times have seen the unfolding of new economic & public policy marked by incentivization of private sector investments, sustainable urbanization led growth, infrastructure enhancement, growing focus on technology & innovation to boost overall productivity, and skill up-gradation of human capital.
FDI policies have been largely deregulated to attract more international capital and systematically, government-run public sector entities are being privatized. Numerous new schemes comprising of concessions, discounts, subsidies are rolled out at the central & state level to offer an enabling environment for businesses to flourish. The existing regulatory frameworks are streamlined and discrepancies are systematically plugged-in.
India’s commitment towards building a business-friendly sustainable environment has also been reflected in the jump in Ease of doing business ranking. In the last two editions of the World Bank’s Ease of Doing Business Rankings, the country has jumped by 37 positions to reach 63rd rank.
Major Government
Policies & Programs
- Make in India : In 2014, India announced the comprehensive Make in India Plan to transform India into a global manufacturing hub. The plan is aimed at increasing the share of manufacturing in Indian GDP to 25% through the help of policy impetus, simplified FDI investments framework, conducive private sector participation alongside skill enhancement, higher value addition in manufacturing, and technological enhancement.
- Digital India : In 2015, GOI launched the Digital India campaign to usher the country towards a digitally-led innovation-driven economy. The multi-layered government program aims at digitization of government services, enhancement of online infrastructure, and improve the availability of the internet to the citizens.
- Start-up India : India is the 3rd largest start-up hub in the world after the USA & China. The country is at a cusp of a start-up revolution with thousands of new ventures been created each year. The start-up India campaign is a comprehensive program to further support the growing start-up ecosystem in India. Besides technology and digital commerce, the program will also incorporate other key sectors such as manufacturing, agriculture, health care, etc.
- Infrastructure & urbanization led Growth : India is aggressively uplifting its overall infrastructure. It is building large logistic corridors, developing new business parks & SEZs, upgrading its port infrastructure, enhancing its power generation capabilities, constructing cold chain grids, and much more. Under the smart city mission, the country is giving a facelift to more than 100 cities. The country is investing USD 1.4 trillion in infrastructure.
Recent Changes post COVID
Post-COVID, the country has finetuned its regulatory & policy framework to play a larger & bigger role in the global economy and emerge as one of its key growth engines.
- Financial Stimulus : The government has announced a USD ~ 280 billion financial stimulus packages to arrest the slump in economic activities due to COVID. This involves liquidity infusion in the economy, provision of easy credits to MSMEs & other businesses, recapitalization of banks, develop rural infrastructure, and much more.
- Self-Reliant India : Post COVID, India is enhancing its overall domestic manufacturing capabilities to become Self Reliant or Aatm Nirbhar, as it is called in Hindi. The roadmap for self-reliant India will be based on robust & modern infrastructure, technology & innovation-driven system, vast domestic consumption & attractive demographic dividend, and a cohesive supply-demand structure.
- FDI in Défense - FDI in defense manufacturing has been increased to 74% from earlier 49% under the automatic route. India is aiming at self-reliance in defense production besides capturing a sizable part of the export market. The country is targeting an export of USD 5 billion in the next 5 years. It has mentioned numerous items under the negative list so that dependence on imports can be lowered and domestic manufacturing capabilities can be enhanced.
- New Agriculture Bill : The government has unveiled a new agriculture bill aimed at improving farm infrastructure alongside helping Indian farmers earn better. The bill will remove barriers of selling and promote intra-state, inter-state, and export of farm products and agricultural commodities. Under the bill, farmers can partner with larger business retailers, businesses, and exporters at a predefined price before sowing. This will promote private sector participation in agriculture and harmonize the risks.
- Export & Trade Promotion : COVID can be a tipping point that will see India playing a pivotal role in global trade & commerce. To further boost export, governing agencies at the central and state level are chalking out new sector-specific policies. These include reduced tax on export, lowering of import duty on raw materials, subsidies on transportations, discount on electricity duties, etc. The government is setting up export promotion cells that can help businesses in acquiring the required approvals from foreign countries. Advanced level of discussions is going on with numerous governments in the Asia Pacific, Europe, South Asia, etc to enhance Indian exports in these markets.
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