India: Evermore Open for Business

Summary

India hass become one of the major foreign domestic investment (FDI) destinations. Between 2000-2016, FDI inflows saw a 12-fold increase. As a recipient country of FDI inflows, India has climbed from 35th position in 2000 to 9th position in 2016. The FDI policy has gone through dramatic deregulation since 2000 and caps on foreign ownership have been lifted or abolished for many industries. Indeed, we see that FDI inflows to India have become more diversified over the years, with industries such as trading, automobiles, pharmaceuticals, chemicals and food-processing becoming major recipient industries of FDI. Considerable challenges remain for India to become truly open to foreign capital. The tax landscape in India remains complex with one of the highest corporate tax rate among major countries. Poor infrastructure and government red-tape remain as serious obstacles. However, as shown in the improvements in the World Bank's Ease of Doing Business ranking, India seems to be making headways in overcoming these challenges. A continued increase in FDI is likely to be a source of further growth for India.

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