In recent times, the Indian government, with the "Make in India" program, has announced many preferential policies to attract investment and turn India into a high-tech manufacturing center of the world. These policies have brought about positive effects, as foreign direct investment (FDI) in India's manufacturing industries has continuously increased.
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| The Indian government, with its “Make in India” program, has announced many preferential policies to attract investment and turn the country into a high-tech manufacturing center of the world. (Source: Reuters) |
Target to attract at least 100 billion USD of FDI capital each year
Responding to Bloomberg in an interview in New Delhi in April 2024, Mr. Rajesh Kumar Singh, Director of the Department for Promotion of Industry and Internal Trade, Ministry of Industry and Commerce of India, affirmed that this South Asian country aims to attract at least 100 billion USD of FDI capital each year, targeting investors who want to diversify their supply chains outside of China.
"Our target is to reach at least $100 billion on average in the next five years. This trend is very positive and optimistic," Mr. Singh emphasized.
As one of the world's fastest growing economies, India's ambitions are well-founded as the country is successfully attracting businesses looking to hedge against geopolitical tensions by further expanding their operations – sometimes referred to as the "China +1" strategy.
Since 2019, India has made waves with its large-scale and extremely attractive foreign investment attraction policies. In March 2019, the Production Linked Incentive (PLI) Program was announced, under which eligible entities will receive 4-6% of additional revenue from products manufactured in India in the form of subsidies. The total scale of the support package is approximately over 7.33 billion USD. Global companies eligible for support include Samsung Electronics, Foxconn Hong Hai, Rising Star, Wistron, Pegatron, etc.
In the race to catch up with the wave of investment shifts in the region, India has also been quick to introduce strong support packages. In 2020, the country spent $20 billion to attract foreign companies to move production to India.
In October 2022, Prime Minister Modi also approved the "Pradhan Mantri Gati Shakti" project with a budget of 1,200 billion USD to invest in infrastructure to anticipate factories moving from China.
Tech giants such as Apple, Samsung Electronics and Google have ramped up manufacturing in India, taking advantage of incentives offered by Prime Minister Narendra Modi's government.
Mr. Sundar Picha, CEO of Google, appreciated the "Make in India" program with the leading policy of Prime Minister Narendra Modi, in providing faster business information and financial incentives to promote the production of goods on Indian territory.
In addition to efforts to attract Apple or Google, in fact, although large Korean companies such as Samsung, LG, Hyundai, Kia... are all operating their factories in India, Prime Minister Modi's government is constantly researching and introducing attractive policies to attract more investment.
Learning from India
Vietnam and India are currently racing to attract FDI flows from around the world, especially capital flows shifting away from China. Both have advantages in stable business environments, abundant labor forces, improved infrastructure and advances in innovative design.
According to experts, from India's "spectacular" investment attraction results, Vietnam can learn many valuable lessons:
Firstly , to attract "eagles" to nest, there must be a specific strategy for each partner. General and widespread goals should not be set, and the results of attracting FDI should not be evaluated only by the total registered capital.
Second , prepare the necessary conditions to attract investment, especially reviewing and supplementing the "clean" land fund. To attract the "eagles" to nest successfully, one of the factors that the Indian government considers important is to establish a "clean" land fund on a large area of 460,000 hectares (equivalent to 6 times the area of Singapore and twice the area of Luxembourg).
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| Vietnam needs to invest heavily in human resources to attract high-quality FDI capital flows. (Source: PLO) |
Third, although Vietnam has had many policies to attract investment, such as encouraging investment in the construction of industrial parks, export processing zones, focusing on the development of supporting industries, etc., in reality, implementation has many limitations and has not brought about efficiency. Therefore, it is necessary to continue to improve policies related to import taxes, policies on planning for industrial park development, as well as improve labor productivity, in order to further facilitate the reception of investment capital flows shifting into Vietnam.
In other words, it is necessary to fundamentally innovate all activities, from investment promotion, construction, and improvement of institutions and policies on foreign investment in line with development trends, approaching advanced standards and harmonizing with international commitments, ensuring consistency, openness, transparency and high competitiveness.
Besides, looking from India, we also learn more ways to "play" with foreign investors, especially when Vietnam is also implementing the "Make in Vietnam" strategy.
According to Deputy Minister of Planning and Investment Do Thanh Trung, with a favorable geographical location for foreign investors, the Vietnamese Government is determined to pursue and develop the semiconductor and chip industry. Vietnam is building a strategy for developing the semiconductor industry and providing maximum support for foreign investors, especially from the US, to invest in and do business in the semiconductor supply chain in Vietnam.
Dr. Bui Duy Tung, RMIT University Vietnam, commented that Vietnam's attractiveness in attracting FDI remains strong. Vietnam's main attractive factors include political stability, economic growth, a young and increasingly urbanized population, competitive labor costs, many free trade agreements (FTAs) and a stable and affordable electricity supply.
To maintain its attractiveness and competitiveness, Vietnam needs to reform its tax policies, establish funds to support direct investment, improve the business environment, develop infrastructure and improve the quality of human resources. Adjust tax laws to align with global minimum taxes, ensuring that Vietnam can retain additional tax instead of transferring it to another country.
On July 31, at the Vietnam-India Business Forum organized by the Ministry of Planning and Investment of Vietnam, the Embassy of Vietnam in India and the Federation of Indian Chambers of Commerce and Industry during the official visit to India of Prime Minister Pham Minh Chinh, the Prime Minister encouraged Indian businesses to expand investment cooperation in areas where India has strengths and Vietnam has high demand and priority such as: High technology, electronics, science and technology, artificial intelligence (AI), infrastructure construction, renewable energy, new energy (hydrogen), biotechnology, innovation, high-tech agriculture, pharmaceuticals, etc. |
India currently has 410 valid projects with a total registered capital of 1.03 billion USD, ranking 25th out of 146 countries and territories investing in Vietnam. Meanwhile, Vietnam has invested in 16 projects in India with a total investment capital of more than 14 million USD, not including Vingroup's investment in India. |
Source: https://baoquocte.vn/vut-sang-tro-thanh-ngoi-sao-trong-thu-attract-fdi-cua-the-gioi-viet-nam-co-the-hoc-hoi-duoc-kinh-nghiem-gi-tu-an-do-280812.html
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