Liberalising FDI caps is necessary but not sufficient to reach the US$100 billion annual FDI target. Discuss.

India wants to attract at least US$100 billion of FDI a year, compared with a five-year average of just over $70 billion [2]. Raising sector caps has made the target realistic. But a pledge does not become a factory until land, power and approvals are in place, and most of those sit with the States.

Why liberalisation is necessary

• Automatic route expanded: most sectors now allow 100% FDI without prior approval. Defence was raised to 74% (for new industrial licences), insurance to 74% and telecom to 100% [1].
• Visible results: H1 FY26 inflows were $50.36 bn, up 16% and the highest ever for a first half [1]. UNCTAD's WIR 2026 ranks India 11th, after a 44% rise in inflows [3].
• Signalling: a policy under "continuous review" tells investors that the rules will stay open and predictable [1].

Why it is not sufficient

• Pledge-to-project gap: the automatic route only clears the money's entry. Projects still wait on land, power, water and building permissions.
• Federal bottleneck: on the National Single Window System, State approvals outnumber Central ones roughly ten to one [4]. Land and water are State subjects under the Seventh Schedule, so a Central cap change touches only a small part of the burden.
• Uneven State capacity: BRAP has driven over 9,700 reforms across seven editions [5]. But it scores whether a reform is adopted, not how fast approvals are actually granted.
• Sector-specific needs: capital-heavy projects such as the world's largest announced greenfield project, a mega data centre [3], need reliable power and land, not just equity permission.
• Global headwinds: investors are cautious worldwide, so India must compete on how fast projects can start, not only on how open the rules are.

Way forward

• Rank States in BRAP on approval timelines and projects started, not only on reforms adopted [5].
• Pass single-window laws with deemed approval when a deadline is missed, and route all State approvals through NSWS so delays become visible [4].
• Use the World Bank's B-READY 2026 assessment to check whether reforms are reaching businesses [6].

Opening the caps brings investors in, but whether projects actually start depends on State-level delivery. Pairing continued liberalisation with cooperative federalism, which puts State approvals on the same footing as Central policy, can turn record pledges into lasting investment, as Make in India intends.