Addressing perceived risks through institutional reforms is crucial for emerging economies (EMs) and India has addressed this challenge by establishing independent regulators, implementing transparent bidding processes, standardising contracts, and improving the ease of doing business, Finance Minister Nirmala Sitharaman said here on Monday.
Addressing the International Business Forum Leadership Summit on "From FFD4 Outcome to Implementation: Unlocking the Potential of Private Capital for Sustainable Development", the Finance Minister said these reforms have significantly enhanced investor confidence and reduced transaction costs in the country.
Emerging economies often face high risk perceptions, which raise financing costs and deter investment.
"Strong domestic financial markets are the foundation of investment. India has invested in strengthening its banking system and deepening capital markets to finance infrastructure and industry at scale," she told the gathering.
"Our regulatory frameworks have evolved with market needs - balancing investor protection with innovation and flexibility - creating a more conducive environment for long-term investment," Sitharaman added.
She further stated that in recent years, "we have witnessed encouraging growth in private investment, supported by the rise of innovative financial instruments alongside traditional sources".
However, private capital mobilisation remains significantly below what is required, with low and middle-income countries receiving a disproportionately small share.
"This underscores the urgent need for targeted efforts to overcome investment barriers and better align financial flows with development priorities," FM Sitharaman emphasised.
Touching upon the importance of India’s renewable energy transformation, she said that 2.8 GW of installed solar capacity in 2014 to over 110 GW today "was enabled by clear national targets, streamlined procurement, and government-backed risk mitigation".
"This model attracted institutional investors, including pension and sovereign wealth funds," she said at the global summit.
According to her, scaling up is actually the critical edge for anything to do with technology or with mass implementation.
"Unless you're able to scale it up, the success of technology can fritter away. Whether it is a matter of technology or welfare-related distribution, scaling up is one big, important factor. India has a natural advantage because of its demography, but otherwise too, today countries will have to come together for successfully scaling up," the Finance Minister highlighted.
On the sidelines of the Summit, Finance Minister Sitharaman was set to meet senior Ministers from Germany, Peru and New Zealand, and the European Investment Bank (EIB) President Nadia Calvino, according to an official statement.
The Finance Minister began an official visit to Spain, Portugal, and Brazil from June 30 to July 5. She is leading the Indian delegation from the Department of Economic Affairs under the Ministry of Finance.
As part of her visit to Lisbon, Portugal, she is expected to have a bilateral meeting with Portugal's Finance Minister Joaquim Miranda Sarmento, besides interacting with prominent investors and members of the Indian diaspora.
In Rio de Janeiro, the Finance Minister will address the 10th Annual Meeting of the New Development Bank (NDB) as India's Governor and also attend the BRICS Finance Ministers and Central Bank Governors Meeting.
Picture Courtesy: IANS
