Latest news with #InvestmentFriendlinessIndex
Mint
02-05-2025
- Business
- Mint
NITI Aayog's investment friendliness index to rank states on four key pillars
New Delhi: Government think-tank NITI Aayog's upcoming Investment Friendliness Index to rank states on dimensions of opportunity and risk will likely have four or more sub-indicators for a deeper assessment of performance, said two people aware of the development. Set for a launch in the ongoing April-June quarter, the index is meant to further the Centre's deregulation push by helping states identify and address regulatory hurdles that deter private investment. Apart from assessing the primary scope of opportunity and risk from investing in a state, the Investment Friendliness Index will also gauge a state government's policy and incentives, infrastructure, business climate and innovation, and resources available, the two people said, requesting anonymity. NITI Aayog has mostly concluded consultations with key industry bodies, state governments, and policy experts to finalise the framework and methodology, they added. 'The index will capture on-ground realities faced by investors and highlight specific state-level regulations that may impede investments," one of them said. 'The index is expected to encourage states to compete for investments and improve ground-level regulations to facilitate easier investment. States will seek to emulate top performers, adopt their best practices, and implement improvements," this person added. Currently, the Reserve Bank of India's annual report on state finances, fiscal health, and debt levels is often used to compare financial prudence across states. Union finance minister Nirmala Sitharaman announced the Investment Friendliness Index in her Union Budget for 2025-26, in February, to encourage states to proactively attract investments and drive economic growth amid rising inter-state rivalry. Also read | State vs state: What investment summits indicate NITI Aayog already publishes several indices to track key aspects of state-level performance. Its Health Index measures overall health outcomes, governance, and key inputs and outputs; the School Education Quality Index evaluates school education performance; the State Energy & Climate Index which assesses energy efficiency, access, and environmental sustainability; and its Export Preparedness Index ranks states on export readiness and ecosystem. The Investment Friendliness Index aims for a more comprehensive assessment. Manoranjan Sharma, chief economist at Infomerics Valuation & Rating Ltd, said an index comparing states on key parameters could help improve regulations and attract more investment. But he added that its effectiveness would depend on its implementation, as the proof of the pudding is in the eating. 'The Central government could make this Index more broad-based and encompassing by including factors like social justice, environmental impact, long-term sustainability, and regional growth," said Sharma, who previously was chief economist at Canara Bank . 'Balanced regional development requires customized initiatives rather than a uniform broad-brush approach oblivious to granular ground-level needs and requirements, credible and transparent data, careful monitoring and evaluation, closer public-private partnerships, and factoring in the interests of all stakeholders to make a perceptible difference," he added. Spokespersons of the ministry of finance and NITI Aayog didn't respond to Mint's queries emailed on Tuesday. In January, the Economic Survey 2024-25 highlighted systematic deregulation as a key driver of economic growth. Chief economic adviser V. Anantha Nageswaran stressed in the report that simplifying or repealing some regulations would make it progressively easier to address the remaining ones, underscoring the need for a focused policy shift towards deregulation. To that end, the Union government has been urging states to implement reforms to boost investment and enhance the ease of doing business, linking access to a portion of its 50-year interest-free loan scheme to specific recommended reforms. Also read | Deregulation: Relieve businesses of relics from India's command economy 'Unlocking India's investment potential hinges on addressing regulatory bottlenecks at the state level," said the second of the two persons mentioned earlier. 'A data-driven index that captures ground realities can empower states to compete constructively, align with best practices, and create an environment where private capital thrives." The Central government has also set up a commission to review and streamline regulations, licences, certifications, and permissions in the non-financial sector to reduce the compliance burden and foster a more business-friendly environment. Led by Union cabinet secretary T.V. Somanathan, the commission will drive policies aimed at advancing the ease of doing business and accelerating growth amid a challenging global environment. Also read | Govt's capex appetite in Q4 fails to lift FY25 investment performance
Mint
22-04-2025
- Business
- Mint
Niti Aayog eyes $25 billion exports of hand and power tools by 2035
New Delhi: The federal policy think tank Niti Aayog on Tuesday laid down a road map to increase India's exports of hand and power tools to over $25 billion by 2035 from $1 billion in 2025. The plan proposed by Niti Aayog and the Foundation for Economic Development (FED) involves creating manufacturing clusters for such tools across the country, bolstered by a cumulative ₹ 57,000 crore investment by government and industry, as per a Niti Aayog press statement. Also Read | Five-year plans back at Niti Aayog, this time to cut emissions The goods included in this plan include wrenches, pliers, screwdrivers and drills, among others. The report also stated that the target of over $25 billion in exports over the next decade is possible by targeting a 10% market share of power tools exports and a 25% market share of hand tools exports. The Niti Aayog report said India has a comparative advantage over China in exporting these goods, as the US, one of the largest importers of these goods, has levied heavy tariffs on Chinese hand and power tools. India's position in the global tool market is currently overshadowed by China, which controls about half of the world's trade in hand and power tools. Also Read | Niti Aayog to launch Investment Friendliness Index by July While Chinese hand and power tool exports account for about $16 billion annually—roughly 50% of the market—India's share in the global export market is marginal, illustrated by a market share of 1.8% of all hand tools and 0.8% of all power tools. However, the study published by Niti Aayog and FED suggested that the wave of Chinese tools exports, which benefited from the country's cost advantage, is likely to hit a trough in the near future, mainly due to tariffs and rising labour costs. The April 2025 report said these conditions would aid India's position in the global export market for hand and power tools. Over the last three weeks, US President Donald Trump and China have engaged in a battle of retaliatory tariffs. On 16 April, the US imposed 245% tariffs on Chinese goods, following a tussle in which both sides continued hiking tariffs against each other. Experts said India could benefit from such conditions with its existing tool exporting hubs in Punjab and Maharashtra. Rahul Ahluwalia, founding director of FED, explained that India's tool production is driven by the massive supply of labour in the country, and a targeted focus on developing this industry would generate millions of jobs. "The main reason the hand and power tools sector is important because it is relatively labour-intensive. And there is a pretty large export market we can get. We already have a competitive ecosystem in India doing a few hundred million dollars of exports. If we play our cards right, we can increase that to $25 billion," said bringing this plan to fruition would be an uphill task, the report stated. India's 14-17% cost disadvantage compared to China is a massive challenge to overcome. Additionally, Indian manufacturers fall behind in the technical know-how necessary for a robust manufacturing ecosystem. Land availability for manufacturing such tools, as well as government support through various schemes, is limited, the report said. Building manufacturing clusters in public-private partnership models and employing a plug-and-play model in these hubs is a key part of the roadmap towards increasing India's hand and power tools exports. The report stated a plan to build 3–4 clusters spanning about 4,000 acres by 2035. Market reforms, including reducing import duties and other import restrictions on raw materials and machinery, would also help bolster domestic manufacturers. The report also recommended a bridge support of ₹ 5,800 crore over five years as market reforms take shape. First Published: 22 Apr 2025, 09:59 PM IST
