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Atmanirbhar Bharat: An analysis of its impact on FDI


This article deals with the core analysis of the relation of Atmanirbhar Bharat with FDI and its impact on FDI by busting the clouds of the myth about Atmanirbharta curbing the FDI and FDI in atmanirbharta is like a pebble in the rice. Hence it proposes the aim and objective to analyze the relation between Atmanirbhar Bharat and FDI following with the challenges and benefits derived through case studies of the Pharmacy sector, Telecom sector, tax laws implementation etc. The concept of Atmanirbhar Bharat came as a silver lining in the dark clouds of Covid-19 which invoked the more innovative side of both the policymakers and the businesses alike to come up with ideas to smooth out the rough road of the economy was going through integrating the concept of FDI which is simultaneously important for the development of any country is also dealt.

Keywords- Atmanirbhar Bharat (ANB), FDI, self-reliance, Covid-19, vaccine.


· What is Atmanirbhar Bharat

It is brought in the similar pattern as in 1991 LPG[1] was launched due to Fiscal and BOP[2] crisis as in the alike manner when the whole world is going through the COVID-19 crisis it gave a new concept of self-reliance in few sectors and become a global supplier. The idea behind ANBis not looking to become an isolated country but is to ensure that country can arise as the new Global supplierCentre of all-new complex modern supply chains.[3]

· Role of FDI in furthering the aim of Atmanirbhar Bharat.

Where the launch of ANB birthed an idea into the minds of people that it might curb the flow of FDI into the country to promote self-reliance, the data only shows otherwise. Even during the COVID-19 pandemic, the country has attracted over USD 22 billion worth of Foreign Direct Investments, most of which has come through the automatic route.[4] Investments in various firms, till June 2020 had more than doubled over the same period last year to $1,700 million.[5] While a large chunk of these investments went to the financial sector, it will not be the focus of this article. Here, we will look upon the industry that thrives to keep others thriving.

The curious case of Pharmaceutical & Health Sector

India, besides its huge population and ever-increasing love for Bollywood, is also known for its relatively affordable healthcare. While the costs have become prohibitive over the years, the fact remains that healthcare in India is still much more affordable than in several other countries.[6] To compensate and fairly serve the medical needs of the population of the country, India produces the largest amount of vaccines in the world, occupying a 20% share in global supply by volume.[7] The need of the hour called for the production of such a vaccine which could be produced at a mass scale while also being relatively affordable. When Bill & Melinda Gates Foundation signed a grant of $150 Million to The Serum Institute of India,[8] The world's largest vaccine manufacturer by volume and sales,[9] to manufacture a possible vaccine for COVID-19, this deal seemed to fall perfectly in place with the concept of ANB – aiming to serve the global and national needs, while manufacturing locally. Serum Institute is in further talks to raise up to $1 Billion for development of a said vaccine.[10] Meanwhile, Beximco Pharmaceuticals has also invested a substantial amount in the SII for priority access to COVID-19 vaccines.[11] Panacea Biotec also got funding from US-based RefanaInc to develop a vaccine.[12] Indian pharmaceutical firms becoming a favourite contender for the manufacturing of a possible vaccine shocked no one considering the country is home to more than 3,000 pharma companies with a network of over 10,500 manufacturing facilities.[13] What did come as a surprising blessing was the traction Indian medical devices industry received. The current market size of the medical devices industry in India is estimated to be $11 billion, 75% of which relies upon imports.[14] Just before the coronavirus outbreak happened in the country, India had no factory that produced Personal Protective Equipment (PPE) kits, today it has over 600 companies that are certified to produce PPEs, whose global market worth is expected to be over $92.5 billion by 2025, that’s a growth of 56 times in 60 days.[15]Molbio Diagnostics, a company that produces portable diagnostics kit that can over 22 infectious diseases (including covid-19) received a funding of Rs. 240 Crores.[16] Several other home-grown companies like HuWel, My Lab Discovery Solutions and Nocca Robotics are also engaged in talk of funding.[17]

Challenges to achieve the goal of Atmanirbhar Bharat in context to FDI

· Case 1

The FDI inflow in the UK as a percentage of GDP has been decreasing since decades, along with M&A inflow since 2016. According to ONS[18], the M&A of other foreign countries have been facing continuous downfall which is again a big setback for FDI. Naturally, this led towards the decrease of GDP and therefore decreases in FDI and a decrease in employment rate as shown in figure 1.[19]

Similarly, India is also facing the same graph according to which the FDI in the percentage of GDP is decreasing continuously since a decade[20] also the graph of inflows of Merger & Acquisition have also decreased to approx. 2/3rd of the last year which is 38.1 Billion Dollar which is 14.1% of decline since the first half of 2019 to the first part of 2020[21]. Observing the similar module of UK if India would also bring a market revolution through ANB concept it would be a tough challenge to stabilize or increase investments from foreign companies when the GDP and the M&A activities are falling apart and having a contradictory outlook from the structure of the ANB Concept.

· Case 2: Financially Stressed Telecom Sector

FDI in telecom sector faced a huge downfall during 2018-19 to $2.67 billion from $6.21 billion, also foreign investment entries in pharmacy were also dropped to $266 million in the same financial year from $1 billion since last financial year.[22]

The reason for this immense downfall is stressed financial condition of the sector due to sudden demand of the tax levied on the revenues earned by them by the government on the principle of 10 years with a two-year moratorium period in since there is ambiguity in the tax laws of the foreign investments and the implementation of the tax collection on the behalf of the government also in other three cases also there has been shown a poor tax structure such as Birla Group case[23], AT&T Wireless Services case[24], Tata Industry case[25]

These cases are certainly alarming for foreign investors seeking to buy Indian assets. This depicts the aggressive way the Indian tax authorities of assessing tax on the assets and also an attempt to narrow the India- Mauritius tax treaty[26]because at the end this results in the hefty cost for the buyers and sellers alike. Hence with such ambiguous laws and tax structure, going forward with ANB concept wouldn’t serve the purpose of procuring the investments to develop the industry and only focusing to develop a single organization by making it an autocratic structure benefits neither the investor nor the customer.

Conclusion& Recommendations

The concept of self-reliance was never to curb the foreign investments but to focus on developing manufacturing capacity so that the export of goods can be put on the front seat. Self-reliant India and its impact on FDI and economy is itself a wide spectrum to cover also it is a very short span passed till now to evaluate the effect of the concept on FDI that whether it will be a boon or a bane for the nation. While it is evident from the traction the medical sector received that FDI only compliments the very heart and soul of Atmanirbhar Bharat, the complications in Telecom sector and FDI downfall in the UK must be taken into consideration too. With the proper framework and delineation for the implementation, ANB might certainly result in the growth of FDI, along with the employment rate and GDP.

The recommendations are as follows: -

a. Proper tax laws and strict implementation shall be imposed.

b. Good governance and strategic ideas of implementation shall be shown with whole transparency as the involvement of the policy include the involvement of every sector.

c. A definite strategic module must bring into action.

Footnotes: [1]Liberalization Privatization & Globalization-It is an economic policy brought to lift up the restrictions on trading of private companies between India and other countries [2]Balance of payments crisis- It is a statement which includes all kinds of transactions made between two different countries for a specified period of time such as a quarter of a year. [3]Smita Dubey, ATMANIRBHAR BHARAT ABHIYAN: AN ANALYTICAL REVIEW, (4 July 2020),UGC Care Group I Journal [4]Amitabh Kant, 'India attracts USD 22 billion FDI during COVID-19 ' (Economic Times, 20 August 2020) <> accessed 23 September 2020 [5]Mahima Kapoor, 'Start-up Street: Covid-19 Fails to Dampen Fintech Investments In India ' (Bloomberg Quint, 06 September 2020) <> accessed 23 September 2020 [6]'India is among the cheapest health insurance markets' (Financial Express, 14 March 2020) <> accessed 23 September 2020 [7] Invest India| [8]Leroy Leo, 'Gates Foundation provides Serum Institute $150 million funding for 2 vaccines' (Livemint, 07 August 2020) <> accessed 23 September 2020 [9] [10]DivyaRajagopal, 'Serum Institute looking for a $1 billion shot to fight covid, talks on with Blackstone, KKR and others ' (Economic Times, 18 August 2020) <> accessed 23 September 2020 [11]Reuters, 'Beximco signs deal with Serum Institute of India for COVID-19 vaccines' (Express Pharma, 31 August 2020) <> accessed 23 September 2020 [12] 'Seven Indian pharmaceutical companies race to develop vaccine for deadly coronavirus' (Economic Times, 19 July 2020) <> accessed 23 September 2020 [13] Invest India| [14] Invest India| [15] Invest India| [16] 'MotilalOswal PE fund to invest up to Rs 240 crore in Molbio Diagnostics ' (Economic Times, 04 March 2020) <> accessed 23 September 2020 [17] Invest India| [18] Office for National statistics-This is UK's largest independent institute which produces official statistics and is also a well-known recognized national statistical institute. There work is to collect and publish publish statistics which is related to the economy, population and other societal measures at national and regional level. [19] Amina Sayed, Changes in the economy since the 1970, (ONS,2 September 2019) [20](The World Bank, 2020) [21]Chitranjan Kumar, M&A activity in India touches a three-year low of $38.1 billion in H1 2020 ( Buisness Today,July 1, 2020) [22]Pranav Mukul, Decline in Foreign Direct Investment inflow: Stressed telecom, uncertainty in pharma to blame, (Indian Express, 30 May 2019) [23]Aditya Birla Nuvo Limited v. DDIT and Union of India[ 2017] Mumbai730 [24]New Cingular Wireless Services Inc. v. DDIT [2009] [25]Tata Industries Ltd. v. DDIT  [2011] Mumbai [2017] [26]India-Mauritius tax treaty- Also known as Double Taxation Avoidance agreement under which Mauritian based companies who want to sell the shares of an Indian company can be exempted from Capital gains tax.

Submitted by,

Shagun Chauhan & Ojasvi Singh,

Jindal Global Law School.


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