The state department, in a report ‘2021 Investment Climate Statements: India’ released on Wednesday, said India “remains a challenging place to do business” and also referred to the removal of the special constitutional status of the state of Jammu and Kashmir (J&K) and the passage of the Citizenship Amendment Act (CAA).
“New protectionist measures, including increased tariffs, procurement rules that limit competitive options, sanitary and phytosanitary measures that are not based on science, and specific Indian standards that do not conform to international standards , effectively isolated producers from global supply chains and restricted expansion in trade, “the report said.
In its report, the state department said that the first 100 days of his second term in the National Democratic Alliance (NDA) government were marked by two “controversial” decisions.
The removal of J & K’s special constitutional status and the approval of the CAA, he said.
India contends that the CAA was its “internal affair” and that “no foreign party has a locus position on issues relating to India’s sovereignty”.
India has categorically told the international community that the removal of Article 370 was an internal matter.
The state department report said the protests followed the enactment of the CAA but ended with the onset of Covid-19 in March 2020 and the imposition of a strict national lockdown.
“Managing Covid-19 became the dominant theme in 2020, including the decline in economic activity, and by December 2020, economic activity began to show signs of positive growth.
“The BJP-led government has faced some criticism for its response to the recent surge in Covid-19 cases,” he said.
The state department said that in response to the economic challenges created by the Covid-19 pandemic and the resulting national lockdown, India enacted extensive social welfare and economic stimulus programs and increased spending on infrastructure and public health.
“The government also adopted production-linked incentives to promote manufacturing in the pharmaceutical, automotive, textile, electronics and other sectors. These measures helped India to recover from a roughly eight percent drop in GDP between April 2020. and March 2021, with positive growth coming back in January 2021, “he said.
Noting that the Indian government continued to actively court foreign investment, the report said that in the wake of Covid-19, India enacted ambitious structural economic reforms, including new labor codes and landmark agricultural sector reforms, which should help attract investment. direct private and foreign. .
In February 2021, Finance Minister Nirmala Sitharaman announced plans to raise $ 2.4 billion through an ambitious privatization program that would dramatically reduce the role of government in the economy.
In March 2021, Parliament further liberalized India’s insurance sector, raising the limits on Foreign Direct Investment (FDI) to 74 percent from 49 percent, although it still requires a majority of the Board of Directors and staff. administrative staff are Indian nationals, according to the report.