Budget 2020: Union Finance Minister Nirmala Sitharaman may announce steps to liberalise insurance sector and foreign direct investment (FDI) in today's Budget speech. With 15 per cent growth ($26 billion), the first half of the year 2019-2020 saw a steady flow of FDI into India, despite slower growth in the global and Indian economy. Experts, however, call for easing of restrictions on FDI and liberalising the insurance sector.
The liberalised norms with a significant jump in the ease of doing business ranking can boost foreign investment in India, which should, in turn, give the much-needed impetus to the economy, they believe.
FULL COVERAGE: Union Budget 2020
FDI is important as the country requires major investments to overhaul its infrastructure sector and boost growth. Recently, the government relaxed foreign investment norms in sectors such as brand retail trading, coal mining and contract manufacturing. The government allowed 100% FDI in coal mining and approved 26 per cent foreign investment in digital media.
In the insurance sector, experts hope the Centre to raise overseas investment limit to 74 per cent from the existing 49 per cent, which could pave way for foreign players to bring in new technologies, new products and ensure better market penetration.
The United Nations Conference on Trade and Development (UNCTAD), in its Global Investment Trend Monitor report, has said that India attracted $49 billion FDI inflows last year compared to $42 billion in 2017-2018. With around 16 per cent surge in Foreign Direct Investment (FDI) inflows in 2018-2019, India drove the FDI growth in South Asia but more focus is needed given the declining growth of the Indian economy.