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Panagariya: Trade Deals, Privatization Key to India's Growth
5 Oct
Summary
- Gross FDI has remained robust, reaching $93-94 billion in 2025-26.
- Private equity exits contribute to net foreign investment decline.
- Trade deals with UK and EU are expected to significantly boost economy.
India's economy is maintaining robust growth, with gross foreign direct investment reaching $93-94 billion in the 2025-26 fiscal year. This strong performance in gross FDI figures contrasts with a decline in net foreign investment, primarily attributed to concentrated exits by private equity firms, which operate on a typical four-to-five-year cycle.
Economist Arvind Panagariya emphasizes that attracting long-term productive investments requires deeper trade liberalization, increased privatization, and essential reforms in the judiciary and energy sectors. He views the increasing investment by Indians abroad as a positive sign of global economic footprint expansion.
Significant progress has been made with trade agreements, notably with the UK and the European Union, with the latter expected to have a greater economic impact. Panagariya also suggests that a US trade deal, despite current geopolitical challenges, could facilitate India's own market liberalization efforts, which have slowed since the period between 1991 and 2007.
