Budget 2024: An elixir to resuscitate global trade and investment into the Indian

The first step focuses on attracting foreign direct investment (FDI) and encouraging foreign companies to establish a presence in India, thereby making the country a more attractive destination for global investors. The simplification of FDI regulations and reduction in corporate tax for foreign companies is anticipated to attract foreign investments, improve operational efficiencies, and support the development of robust infrastructure, contributing to overall sectoral growth and economic stability. The simplification has great significance in the scenario of FDI shrinkage by 3.49% in FY24 to $44.42 billion compared to $46.03 billion in FY23, especially from the UK, the UAE, Germany, Cyprus, Singapore and the US. India had slipped 7 notches to rank 15 in the 2023 World Investment Ranking .

The second step involves providing manufacturing incentives to encourage companies to set up and expand their operations in India. To achieve this, the government has provisioned tax benefits, subsidies, grants, or other financial support to attract companies to invest in manufacturing facilities within the country. According to the Budget 2024, Customs duty exemptions for specific goods used in the manufacture of export products aims to reduce production costs and enhance competitiveness. This policy supports sectors such as textiles, leather, and handicrafts, positioning Indian products more favorably in international markets and driving export growth. Furthermore, the reimbursement of EPFO contributions for newly hired employees is designed to stimulate job creation and incentivize domestic manufacturing. Additionally, the budget has proposed to come out with “Vivaad se Vishwas Scheme” 2.0 for quick resolution of pending tax litigations and disputes, cut down the time limit for initiation of re-assessment proceedings and hiked the appeal threshold limit.

These initiatives are, also, expected to generate substantial employment opportunities, particularly for young individuals, thereby strengthening the labor market and supporting economic growth. The National Industrial Corridor Development Program is a cornerstone of the Finance Minister’s vision. By supporting the creation of industrial hubs, this program might be able to improve infrastructure, generate employment, and attract both domestic and foreign investments. These efforts collectively position India as a favorable destination for FDI, fostering economic advancement.

The final step focuses on promoting export opportunities for companies that have set up manufacturing operations in India. Simplifying and rationalizing export duties on raw materials such as skins, hides, and leather are intended to enhance the competitiveness of the leather industry. This measure is poised to increase exports from this sector, contributing to economic diversification and sustainable growth, contributing to overall sectoral growth and economic stability. Establishing dedicated e-commerce export hubs through public-private partnerships (PPP) aims to streamline regulatory and logistical processes for online trade, significantly increasing India's export capacity and targeting $1 trillion in merchandise exports by 2030. Collectively, these initiatives are designed to enhance India's global trade competitiveness, stimulate economic growth, and ensure sustainable development, reinforcing the nation's position in the world trade and investment market.