Context: Prime Minister Narendra Modi last week said 1.3 billion Indians have embarked on one mission -- to create an "Atmanirbhar Bharat", which seeks to merge the local with the global and ensure the country's strengths act as a global force multiplier. "Time and time again, India has shown that our goal is global good," said PM Modi in his special keynote address at the third leadership summit of the US-India Strategic Partnership Forum via video conference. Pitching India amongst the best investment destinations worldwide, the PM said the country's political stability and policy continuity makes it the best place for global investors looking for attractive business opportunities during the COVID-19 pandemic.
Keynote of PM of India in USISPF

• 1.3 billion Indians have embarked on one mission - to make an “Aatmanirbhar Bharat”, which seeks to merge the local with the global and ensure India's strengths act as a global force multiplier.
• “Time and time again, India has shown that our goal is global good. On the disruptions caused by the Covid-19 pandemic world over, the PM said that the pandemic had also shown the world that the decision of developing global supply chain should not be just based on your cost but also be based on trust. 
• Along with affordability of geography, companies are now looking for reliability and policy stability, and India has all these qualities.
• “As a result, India is becoming one of the leading attractions for foreign investment, be it from the US, the Gulf, the EU or Australia.
• “India offers a transparent and predictable tax regime. Our system encourages and supports honest taxpayers. Our GST is a unified fully IT enabled indirect tax system.

Global headwinds on the Indian economy

• As the Indian economy has gradually opened up since 1991, the global economic situation has had spillovers in India.
• Between 2003 and 2008, the Indian economy was averaging between 8% and 9% growth.
• After the collapse of Lehman Brothers, it came down to 6.2%.
• There is always a spillover of global headwinds on the Indian economy not only through trade, but through capital inflows which have been affected.
• This time the Non-Banking Financial Companies [NBFC] crisis has affected the flow of credit to capital goods.
• The demand for capital goods is down, as is car sales. Real estate is in trouble. The flow of credit to some of these sectors, which were an important determinant of sales, has been affected. This has resulted in a spillover in the rest of the economy.
• India’s exports have not been able to keep pace with expectations, especially in labour-intensive sectors like textiles, where Vietnam and Bangladesh have surged ahead.
• India has failed to make use of the preferential market access that was made available through various trade agreements.

Complexities faced by foreign investor to Invest in India

• Regulatory Procedure and Related Delays: Too many regulatory measures imposed by the Government on the private sector has resulted in lengthy procedure and delays in getting final clearance of a new industrial project. On the Government level, decision making system is poor delays completion of large investment project.
• Unnecessary Control: From the beginning, the private sector of the country is subjected to unnecessary Government control. Price controls imposed by the Government on certain goods has resulted in disincentive to increase production. Rather competition among the rival producers can enlarge the production base and thereby can reduce the prices automatically. Price controls,.dual pricing etc. has resulted in black marketing and hoarding of such commodities.
• Inadequate Diversification: The private sector has been suffering from inadequate diversification as the Government did not allow them to participate in basic, heavy and infrastructural sectors like defence and railways which were earlier reserved for the public sector.
• Lack of Finance and Credit: Although the large scale industrial corporate units of the private sector are mobilising their fund from banks, development financial institutions and from the market through sale of their equities or debentures but the small scale units are facing acute problem in raising fund for their expansion. Further increase in NPA has led to decreased credit for private sector.
• Starting a business in India: It is not easy to start a business in India. It can take between months to complete all the required procedures, with fees and add-on costs dependent on the size and type of business being registered.
• Poor implementation of law: With the introduction of the Companies Act 2013, the law makers had intended to introduce a modular law to the Indian economy, but the stringent provisions led a setback to implementation. The increase in the compliance burden has, to a great extent, curbed the incorporation of companies in India.
• Land acquisition issue: Land acquisition remains complex, because of the difficulties in establishing legal ownership. There are many litigations due to inheritance, fragmented holdings, and demands by sellers to be paid in cash.
• Electricity: The demand is currently more than supply. As the economy booms, and there is a potential for power outages. Power is essential for manufacturing sector and service sectors.
• Infrastructure: There is much focus on infrastructural development, boosting road transport, creating dependable power generation, and modernising state-owned railways. An infrastructure strain poses a challenge to distribution and logistics.
• Exports and imports challenges: Despite government legislation to improve international trade, there are still various hurdles to importing and exporting goods. Exporters and investors face non-transparent and often unpredictable regulatory and tariff regimes. Several layers of bureaucracy make it challenging to move goods efficiently, and companies must file a long list of documents before moving products across borders.
• Skill gap in India: Accessing the right skills is a challenge. Further, employment laws in India are complex. At present, there is a huge variety of laws which need to be consolidated.

How can India become a global manufacturing hub?

• In 2011, the Government of India has announced a national manufacturing policy with the objective of enhancing the share of manufacturing in GDP to 25% within a decade and creating 100 million jobs.
• However, the share of manufacturing in India’s GDP continues to remain at 16- 17%. Even in 1991, this number was the same.
• Learning from success stories of other countries:
• Vietnam, the country of 100 million people, began manufacturing only ten to twelve years ago at a low base in a variety of sectors like garments, electronics and assembly.
• It has now had a sustained growth of 12-14%.

Four critical steps India needs to take:

• India needs to make mega industrial clusters near its ports, which should leverage on labour-intensive manufacturing industries.
• India must aggressively work on policy matters related to – logistics, costs, moving stock by road or rail, loading-unloading time (trade facilitation).
• Manufacturing cannot be successful without boosting export potential. Indian exchange rate policy is a huge handicap because the exchange rate is somewhat overvalued. This causes disadvantage to Indian exporters and industry at large, as Industry has to reckon with cheap imports (If the exchange rate is strong then imports look cheaper than domestic goods).
• Increasing market access. In the present time, trade blocs are more popular than multilateral policies under the World Trade Organisation. India should sign an FTA (Free Trade Agreement) with the European Union that will help in the long run in promoting market access and huge opportunities. Same should be considered with the US as well.

How India can ensure better business environment?

• Government should ease regulations.
• Tariffs should be made predictable and transparent.
• Focus should be on reducing paper work.
• Digitisation of bureaucracy and ease of opening and closing business should be focus.
• Law reforms should be initiated with aim to make labour laws and corporate laws easy and simple.
• Infrastructure investment should be increased.
• New sectors like railways and defence should be gradually opened to private sector.
• Land reforms and digitisation of land should be completed to ease land acquisition.

Five Pillars of a Self-reliant India
Bold reforms across sectors will drive the country’s push towards self-reliance. To spur growth and to build a self-reliant India, Atmanirbhar Bharat Abhiyan rests on 5 important pillars.

• Economy: contemplates not an Incremental change but a quantum leap so that we can convert the current adversity into an advantage.
• Infrastructure: that can be an image of modern India or it can be the identity of India.
• Systems: driven by 21st-century technology, and that is not based on old rules.
• Democracy: a vibrant democracy that is the source of energy to make India self- reliant.
• Demand: where the strength of our demand and supply chain is utilized intelligently.

Road Ahead

• India has the required labour force in abundance and it is high time that all the concerns are addressed as soon as possible at the central and state governments level.
• India has all the potential to be the contract manufacturer of the world in areas such as automobile ancillaries, smartphones, electronic items, capital goods, food processing, pharmaceuticals, chemicals, etc. There is a need to lay focus on the ‘Atma Nirbhar Bharat’ initiative for developing self-reliance across various sectors
• Several initiatives have been launched by the Government in the last two years, such as ‘Make in India’, ‘Start-up India’, ‘Skill India’, ‘Digital India’ etc. with an aim to make India the number one destination for global FDI and to improve ‘Ease of Doing Business’ in India. However, grand initiatives such as ‘Make in India’ usually have long gestation periods and assessments of such initiatives in a short span can be premature.