Make in India a flop? FDI in key sectors has not risen, says study

The government's Make in India programme has not yielded the desired results in terms of increasing the foreign direct investment (FDI) flow into thrust areas, the interim conclusions of an ongoing study by two Delhi-based researchers suggests.

Presenting their initial findings at a workshop organised by Institute for Studies in Industrial Development (ISID) in Delhi, researchers K S Chalapati Rao and Biswajit Dhar pointed out that the cumulative FDI inflows in the Make in India (MII) thrust sectors had hardly increased under the current government from the last two years of the previous UPA government.

The government launched a global campaign to promote Indian manufacturing after coming to power in mid-2014. But while India attracted $ 62 billion as FDI into MII thrust sectors in 2012 and 2013, the inflow was $ 59.8 billion for the same segments from October 2014 to March 2017, the yet-to-be-published analysis notes.

In the manufacturing sector, while India attracted $28.1 billion in MII manufacturing industries [Manufacturing Integration and Intelligence] between 2012 and 2013, the inflow was $19 billion during October 2014-March 2017.

The MII initiative was launched on 25 September 2014 with the objective of facilitating investment, fostering innovation, building manufacturing infrastructure, making it easy to do business and enhancing skill development. The government had also revealed action plans which included policy initiatives, fiscal incentives, infrastructure creation, and ease of doing business, innovation and R&D and skill development, to promote 21 key sectors.

According to the commerce ministry, FDI inflows showed a significant jump in several sectors like aviation, mining, auto and auto components, electronics and IT, ports and shipping, media and entertainment and textiles under the current government.

While FDI grew six times - from $93 million (2011-14) to $519 million (2014-17) in aviation, it grew 5.9 times in mining sector from $213 million (2011-14) to $1261 million (2014-17) and 1.7 times in automobile and auto components, from $3.98 billion (2011-14) to $6.86 billion (2014-17).

The researchers acknowledge the fact that India's FDI inflows have seen growth in recent times. However, they caution that the government data in its current form may not be very reliable as there are constraints in its collection and classification, which are being pointed out in the upcoming study.