Several States are holding investment summits as ‘roadshows’ to attract large-scale infrastructure and development projects from prospective investors, industrialists, multinational companies, foreign collaborators and industrial houses.
While the Central government frames policies and launches campaigns like ‘Make in India’ ‘Digital India’ and ‘Skill India’, it is necessary for States to implement them with the added help of inbound investments to develop infrastructure for growth and generating employment.
The strategic alliances and business partnerships turning into Memoranda of Understanding (MoUs) should be converted into viable and implementable industrial and trade development projects. The demographic advantage and youth energy can thus be channelised to transform the industrial climate for greater productivity and GDP growth.
It is pertinent that such investor congregations are important to fall in line with the global togetherness enunciated by the United Nations Conference on Trade and Development (UNCTAD). It focuses on the need for international private investments and extending technical cooperation for achieving Sustainable Development Goals (SDG) by 2030.
Therefore, an action plan is needed to attract investments by developing economies. The 2030 Agenda for Sustainable Development aims to address social, economic and environmental challenges and requires considerable investments to do so. It may not be possible to generate internal investments to fund mega developmental projects.
The sustainable development index 2017 ranked 157 countries measured in terms of achieving SDGs where India stood at 116 with a score of 58.1, Russia and China ranked at 62 and 71 respectively, Pakistan at 122 while the US was at 42. Sweden led the list with a score of 85.6 followed by Denmark (84.2) and Finland (84).
Considerable efforts are being made by developing countries in liberalising and opening up the economy to invite foreign investment despite the growing global protectionism and nationalism. Cross-border transfer of investments is necessary to bridge the developmental gulf between the developed, developing and underdeveloped economies.
The recently concluded ‘Sunrise Andhra Pradesh Investment Meet’ saw investment commitments to the tune of Rs 4.4 lakh crore. The UP Investor Summit 2018 mobilised investment assurances close to Rs 4.2 lakh crore. Earlier, the Maharashtra Global Investment Summit: Convergence 2018 could potentially seal investment proposals reaching a high of Rs 12 lakh crore. The Advantage Assam in the east could muster pacts worth Rs 65,186 crore. The Bengal Global Business Summit clicked investment prospects close to Rs 2 lakh crore.
The Global Entrepreneurship Summit held in Hyderabad cohosted by the US could push collaborative enterprise to a new high. The strategic potential inbound investments when seen together with past investor summits have great potential to catapult GDP growth to over 8% and can help forge ahead towards New India by 2022.
However, sustained coordinated follow-up efforts at the Centre and State levels will be needed to make investments actually flow into the State. It is necessary to work out hectic implementation schedules, action plan and build monitoring systems to derive synergy of prospective cross-border investments.
The sustained and steady economic reforms, opening up the economy and inclusive approach towards industrial growth could make India’s business and infrastructure turf attractive for foreign investors. The enactment of the Insolvency and Bankruptcy Code – 2016 provides an effective tool to counter the risks of enterprise.
The proposed Fugitive Economic Offenders Bill (FEOB) – 2018 and formation of a distinct regulatory authority – National Financial Reporting Authority (NFRA) – to regulate the conduct of auditors could add to the legal/regulatory framework in dealing with willful offenders.
The sustained overseas confidence built upon such progressive positive policy framework could accumulate robust foreign exchange reserves ($421.7 billion as on February 16, 2018). The more important of this is non-debt investment in equity in the volume of FDI that clocked $33.75 billion in September 2017.
Foreign companies invest in India to take advantage of relatively lower wages, better return on investment, special privileges and tax holidays. Such attractions need to be sustained. Increasing manufacturing capabilities with foreign collaboration can create jobs, provided the States and local government, including village panchayats, join in making investments work.
Going beyond the improved ‘Ease of doing business’ index of the World Bank, its need is rightly extended by prescribing Statewise ranking. It measures the efficiency of the States in implementing the 372 basic business reforms necessary to create an investor-friendly environment.
The next compatibility factor for inbound investment is measure of fair practice. It requires removal of corruption in public life. Corruption Perception Index 2017 published by Berlin-based non-government organisation Transparency International (TI), ranked India at 81 among 180 countries compared with 79 in 2016. More discipline in public administration is needed to improve standing in the corruption index.
If intended investment projects are to deliver value, suitable talent and skillsets are essential. On this score, India has moved up according to a collaborative report of business school INSEAD – Global Talent Competitiveness Index 2018 – to 81 in 2018 among 119 countries taken up for assessment, from 92 in 2017 and 89 in 2016. Comparatively, China is at 43 and Russia at 53 in 2018.
Having showcased capabilities of the States in the recent investment summits, it will be necessary to firmly entrench speedy implementation strategies. Ensure high commitment levels of teams and dedicated real-time follow up of progress to help address legal and governance hurdles.
Roadshows and span of global reach to aspiring investors can be a good beginning. However, taking them to logical end needs sustained strengthening of micro governance with fixed timelines and consistent work towards developing a pronounced investor-friendly ecosystem. Such growth opportunities should not be allowed to dissipate in the maze of administrative obduracy.
(The author is Director, National Institute of Banking Studies and Corporate Management, Noida)