MUMBAI: India must adopt a modern and responsive regulatory framework to sustain its attractiveness as an investment destination, especially as global economic headwinds put pressure on foreign direct investment (FDI) flows, Chief Economic Adviser (CEA) V Anantha Nageswaran said on Tuesday.
Speaking at the Post Budget Webinar 2025 on “Making India Investment Friendly,” Nageswaran stressed that regulatory clarity and ease of business operations are crucial for maintaining investor confidence. He highlighted that while India has emerged as a preferred investment hub, an evolving global landscape demands continuous policy adaptation to sustain this momentum.
“With growth facing headwinds worldwide due to recent policy actions by various governments, India must do everything within its control to sustain a constructive investment climate,” he said.
Benefits of increased FDI
However, he underscored the need for additional policy safeguards to ensure that the benefits of increased FDI directly reach consumers and the broader economy.
A robust investment framework, he added, is essential for capital formation, job creation, and long-term economic growth. Raising the FDI limit in the insurance sector from 74 per cent to 100 per cent is a step in this direction, expected to attract more capital, foster competition, and drive innovation.
Nageswaran also pointed to India’s ongoing work on updating the model text for its Bilateral Investment Treaty (BIT), aligning it with global investment norms while protecting the country’s sovereign rights and regulatory space.
“Investors, particularly in emerging markets, seek stronger protections for their capital. The revised BIT will reflect these concerns while ensuring that India retains the flexibility to prioritize public policy objectives,” he said.
With global FDI flows becoming more uncertain, Nageswaran emphasised that a well-calibrated regulatory framework will be crucial in ensuring that India remains a compelling investment destination.
