India’s FDI restrictions need a rethink for a competitive economy

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Subscribe to enjoy similar stories. India’s journey towards becoming a global economic powerhouse hinges on several factors. One is the ease of doing business.

While India had improved its ranking in the chart published by the World Bank’s Doing Business report, it also slipped on some key parameters before the multilateral institution discontinued this annual assessment in 2021 on allegations of discrepancies and rank manipulation. Conceptually, however, to foster economic growth, making it easier to do business in India is important. Foreign Direct Investment (FDI) also plays a crucial role in this by acting as a catalyst for growth, innovation and job creation.

However, restrictive FDI policies in key sectors are hampering the pace of India’s economic advancement. Addressing these challenges is imperative for the country to unlock the full potential of its economy. FDI is a key driver of growth and socially beneficial outcomes: FDI is more than just an influx of capital; it brings with it technology, expertise and global best practices that are vital for the growth of various industries.

Moreover, it creates jobs, boosts exports and enhances the overall competitiveness of the economy. Countries that have embraced FDI have witnessed significant economic transformations, and India should be no different. In the insurance sector, the Indian government maintains restrictions on foreign investment that limit the ability of foreign companies to fully participate in the market.