For introducing specific provisions in the new industrial policy in Foreign Direct Investment (FDI) center is analyzing FDI inflow and FDI policy to ensure that such funds would result in enhancement in technology transfer, innovation, and local value addition.
Discussion paper on FDI has recommended a review in the current regime of FDI to make it future ready for industrial policy. The analysis of the inflow is being done at the region wise and sector wise level.
For the purpose of promotion of innovation, local value addition and for transfer in technology the global practices and regulations of different countries such as Israel and China and inputs from these practices and regulations will be inculcated into the concerned policies. The government’s investment promotion and facilitation agency - Invest India is helping in the analysis of FDI.
As per the discussion paper of August 2017, investments had been attracted by the FDI but the benefits by retaining and access to the technology have not been harassed to the possible extent. For facilitating great technology transfer, strategic linkage and innovation review is required in FDI Policy. A regime has to be made in FDI Policy for balancing the benefits of inward and outward investments in the short term as well as long-term. The discussion paper also pitched that in medium term it is to be looked at that How can FDI policy channelize investments into the potential sectors to increase domestic value addition and enable brand building?
The concerns have always been there with regard to the emphasis on the quantum of FDI and no focus on the quality of funds. Institute for Studies in Industrial Development Fund conducted a recent study and it was found in the study that it was acquisitions which provided the sustenance for rise in FDI flows during 2016-17. This analysis of the study has raised doubt about the capacity addition. During 2016-17 record inflow of $60.1 billion was received in India.
Crucial information regarding the information on foreign exchange transactions, capacities, production etc are not to be disclosed by the companies to analyze the corporate performance.
National Council of Applied Economic Research in its report of 2016 observed that the as per the responses from ministries, the gap is appearing to be lack of information of FDI inflows into respective states, and with regard to foreign firms in particular states and sectors, and their contribution in terms of employment, trade, and overall economic value-addition.
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