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Where Is the FDI in Manufacturing?
Aug 17, 2016

The 'Make in India' is a very important project for the Modi government as it looks to make India a manufacturing powerhouse. But for that to happen, a lot of bureaucratic bottlenecks have to be eliminated and labour laws overhauled. Not just that, the pace of investments in the sector need to increase.

The good news is that India has managed to convince foreign investors that there is a lot of potential in the Indian economy. It certainly explains why foreign direct investment (FDI) in India has been rising. FDI is important because it signifies that foreign investors are keen to remain invested in India for the long haul. According to Livemint, overall FDI has grown at a solid 25% and 22% respectively in the last two years.

But, if one looks at the chart below, it becomes apparent that most of the FDI is going towards services and construction. Indeed, foreign investors are yet to direct visible interest into manufacturing sectors, exceptions being automobiles and chemicals.

A bit more commitment from the government to do away with red tape and archaic laws going forward, will probably give the much needed boost to foreign investment in the manufacturing sector.

Data Source: Dept. of Industrial Policy & Promotion, Livemint

This Chart Of The Day was published in The 5 Minute WrapUp - Will Babu Culture Be the Downfall of Sarkari Companies?

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