India needs to strengthen and liberalise its regulatory framework and invest more in infrastructure in order to attract increased foreign direct investment (FDI), according to a new report unveiled by the Organisation of Economic Cooperation and Development (OECD).
The OECD's Investment Policy Review for India said the country has designed policies to encourage investment as part of market-oriented reforms since 1991 that have paved the way for improved prosperity.
Restrictions on large-scale investment have been greatly relaxed. “Many sectors formerly reserved to the public sector have been opened up to private enterprise. Import substitution and protectionism have been replaced by an open trade regime,” the report said.
“But further reforms are needed. India's policy framework for FDI still remains restrictive compared with most OECD countries. The investment needs remain massive, with poor infrastructure holding back improvements in both living conditions and productivity,” OECD said in a statement.
OECD Secretary-General Angel Gurría more needs to be done to make the development process more broad-based.
“One of the major challenges facing India is to take advantage of economic growth to reduce the gap between rich and poor,” Gurría said.