Modern framework needed to create growth-conducive investment climate: CEA

Chief Economic Advisor V Anantha Nageswaran on Tuesday said India should have a modern, responsive regulatory framework to create a growth-conducive investment climate, as FDI inflows get impacted due to pressure on global growth.

Addressing the Post Budget Webinar 2025 titled 'Making India Investment Friendly, Nageswaran said India has emerged as the preferred investment destination as evidenced from gross FDI inflows.

"We need to focus on improving regulatory clarity, easing business operation and making sure that plumbing of regulatory framework corresponds with broader vision (of reforms)," he said.

Nageswaran said it is very clear that growth will come under pressure across the world considering the actions taken by various governments over the past one month.

He said India has to do whatever it can domestically to sustain the "mood of constructive optimism" within the country.

He said a robust investment climate is necessary, particularly when global FDI flows are likely to be affected due to rising global risk aversion.

"Investment climate needs to be maintained as it would help in capital formation, create jobs and sustain economic growth. A modern responsive regulatory framework is a sine qua non for this to happen. It is a pre-requisite to create growth-conducive investment climate," Nageswaran said.

On hike in FDI limit in the insurance sector to 100 per cent, from 74 per cent, Nageswaran said this will bring in more capital, competition and innovation.

"We need to mull over incremental policy safeguards that would be necessary so that increased FDI benefits are available to consumers and economy," Nageswaran said.  Chief Economic Adviser V Anantha Nageswaran also said the new model text for bilateral investment treaty (BIT) will be better aligned to the demands of a dynamic global investment environment, while safeguarding India's sovereign rights and regulatory space.  Nageswaran said investors now seek stronger protection for their investments, especially in emerging economies, and this has necessitated an update of the model BIT to align it with international norms, while ensuring that the country remains an attractive investment destination, especially for medium enterprises.

"The new model BIT therefore will be more attuned to the demands of a dynamic global investment environment. At the same time, we will reflect India's sovereign rights and the importance of regulatory space so that public policy priorities are not constrained by international legal obligations," Nageswaran said.