Removal of infrastructure bottlenecks and policy reforms in sectors like retail and insurance will help India attract more foreign direct investment (FDI), Assocham said today.
"Lack of proper infrastructure facilities always discourages foreign investors. Several factors such as slow pace of policy reforms in sectors like retail, real estate, insurance are delaying (foreign) inflows," the chamber said.
It said that sectors such as agriculture and retail, which have enormous potential for attracting FDI, need to be further liberalised.
"Restructuring the land acquisition laws also facilitates more opportunities for investors. The country still has to deal with a sometimes sluggish bureaucracy," it added.
During April-November, 2010-11, FDI into the country declined by 27.4 per cent to $14.02 billion vis-a-vis the corresponding period of the previous year.
"India's pace of growth in attracting FDI shows signs of slowing," Assocham President Dilip Modi said.
However, it said if the prevailing global situation improves, India may emerge as the third-most favoured destination for FDI after China and the US.
"For this, India needs to focus more on issues underlying economic potential, policy framework and bureaucratic functioning," it added.
The government is mulling over liberalisation of the FDI policy in sectors like multi-brand retail and defence.
