India needs £72 bn FDI annually to become £3.6tn economy, says Aghi

TO achieve the target of a $5 trillion (£3.6tn) economy, India would need at least $100 billion (£72 bn) of foreign direct investment (FDI) every year, the head of a top India-centric American business advocacy group said.

The group made the observation that a major chunk of this FDI would come from the US.

“India needs to grow its economy from the current $2.7tn (£1.9tn) to $5 trillion (£3.6tn). It will need a lot of FDI coming in -- at least $100bn (£72 bn) a year to fuel that growth,” Mukesh Aghi, president of US India Strategic and Partnership Forum (USISPF) said.

He said, India, “needs to look at what it needs to do to get that FDI coming in and have the technology coming in, to fuel this growth”.

“From a US perspective, it needs to leverage India on vaccination diplomacy, have Indian factories produce these vaccines so they can ship it to the rest of the world, and they can make this vaccine much, much cheaper than anybody else can get,” he added.

Last week, USISPF, having more than 300 Fortune companies as its members, celebrated its fourth anniversary.

In just four years, the group has emerged as the top India-centric advocacy group for American companies, and have hosted top leaders from both the US and India, including prime minister Narendra Modi.

Going forward, he said the India-US relationship is going to evolve positively.

“When I say positively (it is) because you already have 4.5 half million Indian Americans. They play an influential role, and we have roughly 800,000 gaining green cards. So, I see people's culture gaining more momentum itself. That means, you will see a positive impact between two countries,” Aghi said.

He noted there are challenges as well. “But I think, there'll be enough maturity on both sides to handle issues. For example, when (Secretary of State) Tony Blinken was in India, he talked about human rights. But he also said we are not perfect, we are still trying to understand how to manage this. So, he spoke about it but at the same time said, we're not here to give you a lecture because our house is not in order also,” he said.

He noted that in the first six months of this administration, nothing on the trade front was pushed forward.

“But on the geopolitical alignment in a very cohesive matter, the USA worked with India, to make sure that QUAD continues,” he said.

“I think on the security side, one gap which I see which took place was India's non-involvement in the Afghanistan withdrawal. I see India getting left out on the appliance issue. But overall, geopolitically the approach has been very strong and very positive,” Aghi said.