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India may draw $475 billion in FDI in next 5 years: Report

India may draw $475 billion in FDI: India has promising growth prospects for foreign direct investment (FDI) and has the potential to draw $475 billion in FDI flows over the next five years, according to a CII-EY report. Despite the effects of the pandemic and geopolitical developments, foreign direct investment (FDI) in India has steadily increased over the past ten years, reaching $84.8 billion in FY 2021–22.

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India may draw $475 billion in FDI: Key Points

  • 71% of multinational corporations (MNCs) with operations in India view it as a key market for their international expansion. Prospects for the long run and the short term are what are fueling the optimism.
  • According to the report titled “Vision – Developed India: Opportunities and Expectations of MNCs,” the majority of MNCs believe that the Indian economy will perform significantly better in the next three to five years.
  • With 96% of respondents being optimistic about the overall potential of the country.
  • The robust momentum in India’s domestic consumption, services, digital economy, and infrastructure is dictating the country’s growth trajectory.
  • Behind only the US and China, the forecasted actual growth in consumption is the third greatest, and by 2025, the rapidly growing digital economy is predicted to reach $1 trillion.

India’s Economic Growth: Important Factors

  • India’s potential is fueled by a number of factors, including the country’s ranking as one of the largest and fastest-growing economies in the world, strong consumer patterns, digitization, and an expanding services industry.
  • India is one of the world’s largest economies with one of the fastest rates of growth.
  • The government’s strong emphasis on infrastructure and manufacturing, along with strong consumption trends, digitisation, and a growing services sector, have all contributed to the confidence in India’s potential.
  • Significantly, more than 60% of MNCs reported that the business environment has improved during the previous three years.
  • MNCs value the effects of the GST, the government’s push toward digitalization in many areas, and tax transparency, among other reforms.
  • India is a big and stable democracy which is another factor that makes India a desirable investment destination for MNCs.
  • India is likewise viewed as an option by the majority of respondents to their China+1 approach.

Important Takeaways for All Competitive Exams:

  • CII, Director General: Chandrajit Banerjee
  • Finance Minister of India: Nirmala Sitharaman

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