India Needs Faster Dispute Resolution to Boost FDI, Says CII Chief Mukundan
CII President R. Mukundan urges for swifter dispute resolution mechanisms and regulatory reforms to attract more Foreign Direct Investment. To reach 8%-10% economic growth, India must align its legal processes with global standards and enhance its overall ease of doing business.
Highlights
- •Faster dispute resolution is essential for India to achieve its 8%-10% GDP growth target.
- •CII President R. Mukundan emphasizes the need to streamline arbitration processes to match global standards like Singapore.
- •Current bilateral investment treaty rules requiring five years of domestic litigation are seen as a barrier to FDI.
- •India’s recent FDI inflows trail behind regional competitors like Indonesia and Vietnam.
India is facing a critical juncture in its pursuit of sustained economic growth, with experts emphasizing the urgent need for faster dispute resolution mechanisms to attract higher levels of Foreign Direct Investment (FDI). Achieving an accelerated economic expansion rate of 8% to 10% necessitates a more conducive environment for international investors, according to R. Mukundan, president of the Confederation of Indian Industry (CII).
Enhancing the Investment Climate for Global Capital
A significant hurdle currently identified by the CII is the protracted nature of legal and arbitration processes within the country. R. Mukundan, who also serves as the chief executive of Tata Chemicals, has advocated for a swift overhaul of these systems. He highlighted that effective arbitration should ideally conclude within a matter of months, rather than extending over several years, to ensure that India remains a competitive destination for global capital on par with jurisdictions like Singapore.
The current bilateral investment treaty framework is under review as the nation seeks to bolster its appeal to international partners. A point of contention remains the requirement for foreign investors to pursue domestic legal remedies for up to five years before they are permitted to seek international arbitration. Industry leadership argues that even a three-year threshold is excessively long and acts as a deterrent to potential FDI inflows.
Structural Reforms and Future Growth Prospects
In the fiscal year concluding in March 2026, India recorded net foreign direct investment of approximately $7.7 billion. This figure stands in contrast to the stronger performance of regional peers, with Indonesia and Vietnam seeing inflows of $24.2 billion and $20.2 billion respectively during 2024. These statistics underscore the competitive pressure India faces in the global marketplace.
While the country continues to draw interest, achieving the targeted growth trajectory of 8% to 10% will likely require deeper, more comprehensive reforms to the overall investment climate. Addressing these specific operational challenges is vital to reducing the cost and complexity of doing business. Furthermore, the industrial sector is closely monitoring the progression of a potential India-U.S. trade deal. Such an agreement is anticipated to be a catalyst for improved access to essential technology, capital, and broader international markets, thereby providing a significant lift to domestic economic development.
