Modi govt needs more than tax breaks to make India an investment hub
India wants to attract “mega investments” in manufacturing with tax incentives, but it will need more than that to compete with Southeast Asian peers who are gaining from a shift in global supply chains.
Finance Minister Nirmala Sitharaman outlined plans in her budget last week to offer income and indirect tax breaks to global technology companies to set up factories in India to make everything from semiconductors to solar panels. The government also wants to organize a global summit to attract investors.
As Asia’s third-largest economy, India lags behind Southeast Asian peers when it comes to winning over investors. Foreign direct investment into India was 1.5 per cent of gross domestic product in 2017, according to the World Bank, compared with 3 per cent in Malaysia and 6.3 per cent in Vietnam.