WASHINGTON — Union Finance Minister Nirmala Sitharaman on Friday expressed frustration with the slow crawl of foreign investments to India despite its textbook appeal as a dynamic and robust economy.
"What is holding the investors back?" Sitharaman said responding to a question at a think-tank event about what's holding India back.
"Going by the textbook, where economic activities are good and robust and dynamic, money flows, that's is the normal textbook assumption. I want to ask, Where are the investable funds? Where are the investors? What are they looking at? What's holding them back?"
The Union Finance Minister went on to temper her frustration adding, "India has received quite an appreciable number of FDI. So that's not to say nothing comes to India. Yes, it is coming. I still think there's more opportunity."
Foreign Direct Investment in India has been declining in recent years as a percentage of its Gross Domestic Product, coming in at 0.8 per cent in 2023, according to the World Bank.
It's down from the PM Narendra Modi government's peak of 2.4 per cent in 2020 and considerably down from the all-time high of 3.6 per cent in 2008, which was Prime Minister Manmohan Singh's first term.
The Finance Minister, who is in Washington D.C. for the autumn meetings of the World Bank Group, which included the International Monetary Fund, expressed consternation that India would be ignored by global investors despite the conditions.
"With all the conversation of China Plus One, shared values, democracies, English speaking, demographic dividend, with skill sets of Indian young being so good that they are manning the GCCs of the world located in India and GCCs of the world located outside," she said referring to the business strategy of large corporations to diversify their foreign investments in one or more other countries than in China during and after the 2019-2020 Covid-19 pandemic.
A GCC is an offshore unit of a company that provides services to the parent company from a location with low labour costs.
"So I don't think anything is holding the Indian economy back," the Minister said, agitating her grievance with foreign investors.
"The policies are working. Reforms are still happening, and it shall continue to happen. Greater liberalisation of the economy will be there. And in a way, I think we are accessing newer and newer friends and also speaking more about the Indian economy on more revenues, more platforms."