Archive · 29 Jul 2026
India Loses $174 Billion Due to Investment Restrictions and Market Distortions
India has made significant economic progress over the past decade, but it is still losing a lot of money because of restrictions on foreign investments and other market issues.
A report by Competere Foundation says these problems cost India about $174 billion.
The biggest part of this loss, $127.2 billion, comes from rules that limit foreign investments.
The rest, $46.4 billion, is due to issues with competition policies.
The report also says that India has improved a lot in reducing these problems, moving up 25 places in a global ranking.
Reforms like the goods and services tax (GST) and the insolvency and bankruptcy code (IBC) have helped a lot.
However, the report suggests that more needs to be done to address remaining barriers in sectors like retail, e-commerce, media, defense, banking, and aviation.
The report also warns about a proposed digital competition law, saying it could make things worse if it shifts from the current approach.
Overall, the report says India has a great story of economic transformation and should keep working on improving its investment environment and competitiveness.
India loses $173.6 billion due to foreign investment restrictions and market distortions.
Foreign investment restrictions account for $127.2 billion of the loss.
Competition policy drift accounts for $46.4 billion of the loss.
India has improved its ranking in reducing market distortions, moving from 82 to 57.
Reforms like GST and IBC have significantly reduced internal market frictions.
- Who
- Competere Foundation
- What
- Economic losses due to foreign investment restrictions and market distortions
- When
- 2010-2023
- Where
- India
- Why
- To highlight the economic impact of market distortions and the need for further reforms
Pro-Reform Stance
Cautious Approach
Foreign Investment Restrictions
Pro-Reform Stance
Foreign investment restrictions should be relaxed to boost economic growth and attract more investments.
Cautious Approach
Foreign investment restrictions should be maintained to protect domestic industries and ensure national security.
Competition Policy Drift
Pro-Reform Stance
Competition policy should be strengthened to enhance market contestability and innovation.
Cautious Approach
Competition policy should be balanced to avoid excessive regulation that could stifle business growth.
Digital Competition Law
Pro-Reform Stance
The proposed digital competition law should focus on ex-ante regulation to prevent anti-competitive practices.
Cautious Approach
The digital competition law should maintain an effects-based approach to ensure fair competition without overregulation.
- Total Economic Loss
- $173.6 billion
- Loss Due to Foreign Investment Restrictions
- $127.2 billion
- Loss Due to Competition Policy Drift
- $46.4 billion
- GDP Per Capita Loss Reduction
- 11 percentage points
- Annual GDP Per Capita Growth Increase
- 1 percentage point
- Anti-Competitive Market Distortions Ranking
- 57 (improved from 82 in 2010)