In what could be considered as a moment of great pride for India, the India Aspiration Fund, which was launched as a part of StartUp India initiative by the Indian government has earned itself a mention in the United Nation's "World Investment Report 2017: Investment and the Digital Economy."

The report released by the UN Conference on Trade and Development (UNCTAD) cities the aforementioned Indian report as a successful example of how government policies can support investment in services and development of the digital sector through several interventions.

Launched with corpus of Rs 2,000 crore by Finance Minister Arun Jaitley in August 2015 as a part of Modi government's StartUp India initiative, the India Aspiration Fund aims at enhancing the equity availability to Micro, Small and Medium Enterprises in the Indian subcontinent.

Speaking of the fund, the UNCTAD report mentions "India has created the India Aspiration Fund, a so-called 'fund of funds' with US $306 million to invest in private venture capital funds in order to expand the pool of, and boost, Indian entrepreneurs."

The report also highlighted how there is a need for countries to have modernising, digital economy investment policies or complementing analogue-era rules. According to the report, the point has been illustrated by India's investment policy, which has long restricted foreign investment in their retail sector, giving green signal to FDI in wholesale but not in consumer retailing.

In order to maintain this investment policy, India has to ensure certain restrictions on direct internet sales to Indian consumers by companies such as US's e-commerce giant Amazon, as well as investment measures taken last year by the Indian government that made way for FDI in electronic marketplaces - online platforms for merchants - but not in e-commerce firms that are managing their inventory by themselves.

The UNCTAD report also noted that the Indian government has amended a lot of regulations in the recent past in order to further liberalise and rationalise the investment regime prevalent in the South Asian country for foreign venture capital investors and encourage more entrepreneurship in the country.

In June last year, India introduced its citizens to another comprehensive FDI liberalisation strategy which raised sectoral caps in different industries and brought more activities under the automatic route.

The report by UNCTAD also threw light on how even after digital multinational enterprises clocked "dramatic" growth over the past few years, still more than 60 per cent of the top 100 such ventures are based in developed countries- the US, the UK and Germany, thus leaving a lot of space for growth in other countries. It also noted that only four companies in the top 100 were based out of developing nations.

The numbers for affiliates of those top 100 ventures also paint the same picture as only 13 per cent of them are based in developing and transition economies, compared to about the 30 per cent figure recorded overall.

Coming to business and operations, even though digital multinational enterprises have about 70 per cent of their sales abroad, but only 40 per cent of their assets are based outside of their home countries. This means, they are creating fewer job opportunities directly in their host countries.

The report also acknowledged that such investments are capable of increasing competition and spurring digital development. The report calls for the creation of regulations and policies for the promotion of investment that would take into account the new cross-border operating models of MNCs as well as those that capable of strengthening digital development strategies.

According to the report, in order to encourage digital development all around the world, there is a need for the governments to come up with targeted investment policies that would work towards promoting digital firms, building connectivity infrastructure, and whole-heartedly support digitalisation of the broader economy.

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