Bihar's Investment Pitch Meets a Crowded Field: Lessons from Vietnam and Bangladesh

India's Own Verdict

India's 2026 Economic Survey, authored under Chief Economic Adviser V. Anantha Nageswaran, delivered an unusually candid assessment of the country's own investment competitiveness: to live up to its potential amid shifting global supply chains and tariff risks, India should take specific lessons from emerging Southeast Asian economies. Gross FDI into India reached roughly $81 billion in the 2025 financial year, a 13 percent rise year-on-year -encouraging, in the Survey's own words, but 'below India's potential,' a phrase that applies with at least equal force to individual Indian states competing for a share of that inflow.

The Survey singles out Vietnam's Decree 19, a 2025 special investment procedure that streamlines licensing for high-tech investment with defined, predictable clearance timelines, alongside Malaysia's Golden Pass scheme for start-up entrepreneurs and venture capitalists and the Philippines' Create More Act, which allows investment promotion agencies to fast-track special visas for foreign nationals with highly specialised skills. None of these are primarily subsidy programmes; each addresses a specific process friction that investors have identified as a deciding factor in where they ultimately locate capital.

What Vietnam Actually Did

Vietnam's 2025–26 numbers illustrate why the comparison stings for competing destinations. The country posted GDP growth of roughly 8 percent for 2025, peaking at 8.46 percent in the fourth quarter, registered FDI of $33.7 billion and manufacturing and processing investment alone drew $9.8 billion -56.5 percent of newly registered FDI capital, concentrated overwhelmingly in electronics and high-tech manufacturing. Total trade reached over $930 billion, an 18.2 percent year-on-year increase and Vietnam's industrial workforce now numbers approximately 17.3 to 17.5 million people employed in industry and construction, a workforce scale capable of meeting genuinely large-scale production demands.

None of this rests on incentive generosity alone. Vietnam's pitch to investors combines predictable, time-bound licensing under Decree 19, an extensive network of free trade agreements that give manufacturers export-market access most competing destinations cannot match and an increasing supply of ready-built factories and warehouses specifically designed to minimise the time between an investment decision and operational production -in some cases collapsing what would be a multi-year construction timeline into a matter of months.

Bangladesh's Narrower, Sharper Reforms

Bangladesh offers a different and, in some ways, more directly applicable, lesson for a state like Bihar: reform under genuinely difficult fiscal conditions, rather than reform funded by abundant capital. FDI into Bangladesh rose to $1.77 billion in 2025 after several difficult years of foreign-exchange pressure and domestic uncertainty -still below its 2019 peak of more than $1.8 billion, but a rebound driven by reinvested earnings and intracompany loans that, according to UN Trade and Development, signals investors already present remain engaged even under tighter macroeconomic conditions than most competing destinations face.

The reforms behind that stabilisation were narrow and specific rather than comprehensive: a 2023 Income Tax Act simplifying procedures and expanding digital filing and a 2025 labour framework strengthening worker protections in direct response to years of international scrutiny over factory conditions in Bangladesh's garment sector. A new patents law, designed to bring intellectual-property rules closer to global standards, has offered greater legal certainty specifically to technology- and knowledge-based investors -a narrower target than a general investment-climate overhaul, but one addressing precisely the friction most cited by the specific class of investor Bangladesh was trying to attract.

Bangladesh's inward FDI stock has remained broadly stable at around $18 billion since 2021, concentrated mainly in textiles, finance and power -evidence that even without matching Vietnam's growth trajectory, a country facing considerably more difficult starting conditions than Bihar can still meaningfully improve its investment climate through targeted, achievable reform rather than attempting comprehensive transformation simultaneously.

Where Bihar's Pitch Currently Stands

Set against this backdrop, India as a whole received $38.89 billion in FDI in 2025, up nearly 44 percent and rising two places to become the world's 11th-largest FDI recipient -a genuine improvement, yet still modest next to China's $104.66 billion or the United States' $277 billion. Analysts tracking the recovery increasingly note that India's large, headline-grabbing project announcements -Alphabet's proposed $14.5 billion data-centre project, Google's $15 billion Andhra Pradesh AI data centre commitment, a roughly $4 billion green-ammonia project near Visakhapatnam -have not yet translated into the wider base of medium-sized manufacturers who build plants, source domestically and export at scale the way Vietnam has, at a rate of thousands of smaller decisions rather than a handful of large ones.

Bihar's new Semiconductor, GCC, AI and Sugar policies are, in this light, well-timed responses to a real and growing opportunity -India's overall FDI recovery and the broader 'China+1' diversification of global supply chains that has benefited Vietnam most visibly. But the operative comparison Bihar's policymakers should be making is not primarily whether Bihar's incentives are generous enough, since most global investment competitions are no longer won on subsidy size alone in a field this crowded. It is whether Bihar can match Vietnam's defining advantage: predictable, time-bound approvals that let an investor plan a production timeline with confidence, rather than an open-ended administrative process whose duration is itself a source of investment risk.

What Bihar Specifically Could Learn

A Bihar-specific application of the Vietnam and Bangladesh lessons would look considerably more targeted than the current policy cluster's broad sectoral approach. From Vietnam, the clearest transferable element is not the incentive structure but the administrative one: a published, legally binding maximum processing window for semiconductor and GCC investment approvals, of the kind Decree 19 establishes, would directly address the single friction most consistently cited by investors comparing India unfavourably to Southeast Asian alternatives.

From Bangladesh, the transferable lesson is one of sequencing and focus rather than any specific reform: rather than attempting simultaneous transformation across semiconductors, sugar, GCCs, AI and MSMEs, a narrower initial focus on the two or three reforms most frequently cited by investors already engaging with Bihar -plausibly land-title clarity and approval-timeline predictability, both of which recur across this issue's other pieces -would allow the state to demonstrate credible delivery before expanding the scope of its ambition further.

Policy Recommendations

✓  Adopt a Decree-19-style time-bound clearance mechanism for Bihar's semiconductor and GCC investment approvals, with a published, legally binding maximum processing window rather than an indicative target.

✓  Study Bangladesh's narrow, targeted reform model explicitly: identify Bihar's two or three most-cited investor frictions through direct investor surveys and address those specifically before expanding policy scope further.

✓  Track Bihar's FDI and domestic investment pipeline against Vietnam's manufacturing-FDI share (56.5 percent) as a benchmark for investment quality and depth, not simply investment volume or headline announcement value.

✓  Expand ready-built industrial infrastructure -factory shells and warehouses available for immediate occupancy -to compress the time between an investment decision and operational production, mirroring Vietnam's fastest-growing industrial-property segment.

FACT BOX: The Global Investment Race

▪  $38.89 Bn -India's total 2025 FDI (up 44% YoY)

▪  $104.66 Bn -China's 2025 FDI

▪  $33.7 Bn -Vietnam's 2025 registered FDI

▪  8% -Vietnam's 2025 GDP growth

▪  $1.77 Bn -Bangladesh's 2025 FDI

*"Most global investment competitions are no longer won on subsidy size alone -Bihar's policies now compete on the same axis Vietnam has already mastered: predictability."*

REFERENCES

Government of India, Economic Survey 2025–26

UN Trade and Development (UNCTAD), "Bangladesh investment reforms offer lessons for developing economies," 2026

Vietnam Briefing / JTM Asia, "Vietnam Manufacturing Landscape 2026"; Groupe IDEC, "Vietnam 2026 Industrial Market Outlook"

Policy Circle, "India FDI recovery masks a manufacturing gap," 2026

IBEF, "Exploring India–Vietnam Trade and Economic Relations"