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India lags in attracting foreign investments
Jun 22, 2016


India has been attracting foreign investments thanks to the government's Make in India initiative and other reform measures. The country's FDI inflows rose by 26% to US$ 44 billion in 2015. Services continue to attract the largest investments riding on the wave of e-commerce and start-ups. But the employment generating manufacturing segment has lagged behind. Even globally, India ranks tenth in terms of the quantum of FDI inflows. This is reflected in the fact that the country's FDI accounts for a mere 2% of the GDP as compared to 5% for a smaller country like Vietnam. India's total FDI inward stock at US$ 282 billion is only a tenth of the combined FDI stock of China and Hong Kong.

Therefore, India still has miles to go before it attains the tag of the most favoured investment destination. In a positive move, the government has further relaxed the FDI norms in seven sectors including defence, pharmaceuticals, aviation and single-brand retailing. This is barely seven months after it had eased norms for foreign investments in 15 sectors. These liberalisation measures are likely to fuel growth in the economy in the long run.

Data Source: Livemint, UNCTAD

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