After a dash for hot dollars, India dives deep for sticky money
The government appears to be shifting its focus from attracting short-term foreign capital to securing long-term foreign investment as it seeks to strengthen India’s external accounts.A reported proposal to raise the threshold for FDI projects requiring CCEA approval from ₹5,000 crore to ₹15,000 crore could ease approvals for large investors.
India is taking a significant step toward attracting more long-term foreign investment by considering raising the threshold for foreign direct investment (FDI) projects requiring Cabinet Committee on Economic Affairs (CCEA) approval. This proposal, reported by PTI based on unnamed sources, aims to increase the threshold from Rs 5,000 crore to Rs 15,000 crore, potentially easing bureaucratic hurdles for large-scale projects.
The government's move comes as it seeks to bolster India's external accounts amid a deteriorating economic environment. Policymakers have been implementing a mix of initiatives to draw in foreign capital, including short-term measures like special deposit schemes and overseas borrowing incentives. However, they are now emphasizing long-term investment, recognizing that not all dollars are equal.
A key shift in strategy involves attracting "sticky money" – durable capital that remains in the country for extended periods, building factories, generating exports, and creating future foreign-exchange earnings. This contrasts with "hot money" measures aimed at providing immediate liquidity. The government's approach reflects a balance between addressing short-term liquidity concerns and fostering a stable environment for long-term economic growth.
Written by urgent.news from The Economic Times - Economy's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
