Takshashila Discussion Document: Attracting Large Investments in the Post COVID-19 World

By Shankar Khasnis, Sarthak Pradhan

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India must be prepared with a post-pandemic economic reconstruction plan to revive the different sectors of the economy. It is here that attracting large investments becomes important. To do that, India must address the traditional hurdles (low credibility as an investor-friendly destination, tedious land acquisition processes, and cumbersome regulations, poor infrastructure for large scale projects) and create enabling conditions.

For the above, we propose the following policy recommendations –

  • The national investment promotion and facilitation agency – “Invest India” should focus on the entire investment cycle. In addition to providing information, investors should also be assisted in structuring their financials, money movements, obtaining land, and other necessary statutory clearances. Operational and administrative services must also be extended to investors.
  • To prevent policy uncertainty and boost investor confidence, state governments must agree for international arbitration. Policy uncertainty can also be reduced if competitive federalism is used to let states bid for Request for Proposals (RFP) through the Ministry of Corporate Affairs.
  • To facilitate inward and outward movement of goods, India needs to invest in expanding its air and sea cargo facilities. Hinterland connectivity to these facilities needs to be ensured by constructing highways and railway networks. Warehousing infrastructure needs to be ramped up.
  • To provide a cost advantage in terms of raw materials, the Union government should incentivise the creation of global sourcing agencies. This cost advantage will also provide an edge in exports to manufacturers in India.
  • To ensure a healthy supply chain for large investments, MSMEs need to be provided with interventions like subsidised loans, tax waivers, grants for technology upgradation, and sector-specific infrastructure support.
  • To improve the quality of labour supply, newer models of skill development must be used with the private sector playing the leading role.
  • Sectors where India has the potential to be globally competitive need to be identified and 2-3 marquee investments established in each of these sectors. Sectors like textiles & garments, electronics manufacturing, auto components, medical devices, building materials, etc. hold potential.

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This document is prepared for discussion and debate by the authors. It does not necessarily constitute Takshashila’s policy recommendations. For any feedback, please email shankar@advisoryfeedback.com, sarthak@takshashila.org.in.