Calibrating India’s inbound investment framework, Pg8

Key Highlights:

• India's gross inward Foreign Direct Investment (FDI) reached a record $94.8 billion in FY26.
• UNCTAD’s World Investment Report 2026 ranks India as the 11th top global FDI destination.
• India experiences a lag in the actual deployment of greenfield projects despite high FDI inflows.
• Reforms are underway in labour codes, tax certainty, and Quality Control Orders (QCOs) to enhance the investment climate.
• New Free Trade Agreements (FTAs), such as the India-EFTA TEPA, include binding investment targets.

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Detailed Insights:

• India attracted $7 billion in greenfield data center investments in Q1-Q3 2025, trailing major economies like the U.S. and France.
• Operational bottlenecks causing investment lag include inter-ministerial and Centre-State coordination challenges.
• The Commercial Courts Act, 2015 and the Mediation Act, 2023 aim to expedite commercial dispute resolution.
• Implementation of the four consolidated labour codes is fragmented due to labour being on the Concurrent List, requiring varied State notifications.
• The Taxation Laws (Amendment) Act, 2021 resolved retrospective tax disputes, complemented by the Vivad se Vishwas scheme.
• The government recalibrated QCOs by withdrawing them on critical intermediate goods, easing compliance for MSMEs.
• The India-EFTA TEPA sets a $100-billion investment target but lacks an independent bilateral investment dispute mechanism.
• A revised Standard Operating Procedure (SOP) by DPIIT in May 2026 sets a 12-week deadline for approvals.
• India's mobile phone manufacturing sector's 33-fold growth since FY15 exemplifies successful coordinated policy implementation.

Key Concepts Involved:

• Foreign Direct Investment (FDI): An investment made by a firm or individual in one country into business interests located in another country.
• Greenfield Investment: A type of FDI where a parent company builds new facilities from the ground up in a foreign country.
• Concurrent List: A list of subjects in the Indian Constitution on which both the Union and State governments can legislate.
• Free Trade Agreement (FTA): A pact between two or more countries to reduce barriers to imports and exports among them.
• Quality Control Orders (QCOs): Mandatory certifications issued by the government to ensure the quality and safety of products.
• Bilateral Investment Treaty (BIT): An agreement between two countries for the promotion and protection of investments.