Union Finance Minister Nirmala Sitharaman on Monday acknowledged concerns raised by foreign portfolio investors (FPIs) and equity market participants about India’s investment environment, saying the government is aware of changing global circumstances and will consider their feedback to sustain economic growth above 7%.
Sitharaman said attracting foreign investment required more than just changes in taxation. She pointed out that India’s tax structure was broadly similar in 2023-24, when the country witnessed substantial foreign capital inflows.
“Nothing differently was done for drawing investments. But of course, the situation is very different now. Circumstances have changed. Challenges have grown,” she said.
The Finance Minister emphasised that India needed adequate capital, particularly equity investments, to maintain its growth momentum. She also indicated that the government was open to engaging with market participants to understand their concerns and address challenges affecting investment flows.
“I wouldn’t want to say more at this stage, but I recognise the voice,” she said, referring to investor concerns.
India needs greater equity market participation
Sitharaman said the government had focused on deepening and widening the country’s bond market over the past few years. However, concerns were now emerging over the need to provide greater support to equity markets to attract investments.
She acknowledged the importance of foreign capital in financing India’s growth ambitions and said the government would take feedback from investors into consideration while assessing the changing global investment environment.
GST collections indicate strong consumption demand
On domestic economic conditions, the Finance Minister expressed confidence that India’s consumption growth would remain strong.
Referring to the latest Goods and Services Tax (GST) collection figures, she said the numbers indicated sustained demand in the economy. Consumption and demand had become more visible following the implementation of next-generation GST reforms, encouraging companies to consider fresh investment opportunities.
Sitharaman also said private sector investment was gradually gaining momentum, although businesses continued to select sectors carefully before committing capital. Improved visibility of demand was among the factors supporting this trend.
Skill development and AI adoption remain priorities
Highlighting employment challenges, Sitharaman said there was a need to bridge the gap between the skills acquired by young graduates and the requirements of industry.
She said the government had undertaken several skilling initiatives over the past two Union Budgets. Preparing the workforce to adopt and use artificial intelligence (AI) across industries, including micro, small and medium enterprises (MSMEs), was another important priority.
Government reviews PLI scheme performance
Defending the government’s production-linked incentive (PLI) framework, Sitharaman said companies received incentives based on additional production.
While the scheme had delivered encouraging results in certain sectors, its performance had been relatively weaker in others. She indicated that these areas needed further examination.
The Finance Minister also highlighted improvements in government procurement, tendering procedures and project execution, saying the reforms had made government processes more business-friendly.
She urged industry representatives to maintain regular communication with the government, particularly regarding their investment plans, operational challenges and expectations.
Sitharaman’s remarks come amid concerns over foreign portfolio investment flows and the need to strengthen India’s attractiveness as a destination for domestic and international capital.
