Virtual Global Investor Roundtable (VGIR) for Foreign Investment in India

Context- Prime Minister has chaired the Virtual Global Investor Roundtable (VGIR), with an aim to attract investment.

What Virtual Global Investor Roundtable (VGIR) 2020 conference?

It is an exclusive dialogue between leading global institutional investors, Indian business leaders and the highest decision-makers from the Government of India and Financial Market Regulators.

• Organized by– Ministry of Finance and the National Investment and Infrastructure Fund (NIIF).
• Focus for 2020– Discussions around India’s economic and investment outlook, structural reforms and the government’s vision for the path to a USD 5 trillion economy by 2024-25.

Key highlights of the conference-

• National Infrastructure Pipeline– Under it, India has an ambitious plan to invest USD 1.5 trillion in various social and economic infrastructure projects, aimed for faster economic growth and alleviation of poverty in the country.
• India as safest investment hub– Prime minister in this conference pitched India as the ideal destination and the country offered returns with reliability, demand with democracy, stability with sustainability and growth with a green approach.

What are the challenges for revival of investment?

1. Low FDI inflow in India –Contraction in investment since July-September quarter in 2019 and then the Pandemic has caused a further shock.

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• Fixed investment has continues to face an uncertain outlook given the weak consumption because of the Demand shock caused by pandemic.
• Lack of funds– the government’s ability to apportion more funds for growth-spurring capital projects is hamstrung by a widening fiscal deficit amid border stand-off, the health crisis and revenue shortfall.

2. The three-fourths of FDI equity inflows in 2019-20 fiscal-year being accounted by single large telecom company, a bulk of this investment is unlikely to manifest as new job-creating factories or businesses.
3. Lack of policy stability – Bureaucratic procedures and corruption continue to make India less attractive to foreign investors.
4. Infrastructure is also one of the issues that need to be addressed.

Possible solutions

• Assurance of stability– India needs to ensure that assurance of stability is buttressed by actions that dispel investors’ concerns over unstable policy.

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