India as an investment destination : 9 point framework – UPSC GS3

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 Nine-Step Framework to make India an investment destination
  1. Identify sectors for priority treatment: While electronics, computers, telecom, precision equipment, factory machinery products constitute 70% of global trade, but India’s share is a low 0.7%. These sectors can be targeted.
  2. Recognise sectoral concerns:
    • A sector may generate a large turnover, but net earnings may remain small because of large import dependence.
    • For eg. for doing the iPhone’s final stage assembly, China gets just $12, which is less than 2% of its retail price of $700.
    • Assembling an EV battery from imported lithium cells or making mobile phones from imported subassemblies results into low value addition.
  3. Invite top global firms to become anchor manufacturers in priority sectors:
    • It will expand use of innovation and technology in the entire sector.
    • For E.g. Maruti-Suzuki in auto sector, GE in Bangalore which led to development of many ancillary industries.
  4. Effective coordination with lead investors:
    • Nominating liaison officers to coordinate with government on the firm’s behalf for the entire project cycle.
    • Both sides may discuss available location options or extra support the investor may need.
  5. Plug-n-play manufacture space: 
    • Like industrial zones, where each zone takes necessary permissions for all future units to avoid delay in buying land and approvals.
    • Industrial corridors are being developed across 32 places in India under the National Master Plan may adopt this model.
  6. Efficient Freight System:
    • Ensure quick factory to ship movement through dedicated freight corridors and by locating industrial zones near sea and locating industrial zones near the sea.
    • Port and customs procedures must be done in the industrial zone to avoid crowding and ensuring just in time arrivals.
  7. Review the import duty structure:
    • By testing the impact of lowering of import duty on the production and export ecosystem of remaining products.
    • Even a modest duty on electronic component (made of assemblies of thousands of components) can have a multiplier effect on the whole value chain.
  8. Stable Policy regime:
    • Ensure predictability and reduce arbitrariness in policy regime by avoiding backdated policy changes and reducing scope for interpretation in tax laws by use of clear, unambiguous language.
    • For e.g. different interpretation of double tax avoidance treaty by India and Nokia resulted into shut down of Nokia’s operation in India.
  9. Quick resolution of disputes: because long judicial delays compromise India’s attractiveness.
Conclusion: The nine-step framework will enhance India’s appeal as a credible manufacturing and investment destination.
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