Maharashtra regains top recipient status for FDI inflows

Within Vidarbha, the textile park in Amravati attracted huge investment largely led by policy shift to have textile units only in cotton producing areas.

Written by George Mathew | Mumbai | Published:July 8, 2017 3:31 am
FDI, Maharashtra FDI, Maharashtra foreign investments, Delhi FDI, indian express news Picture for representational purpose

After having lost to Delhi for two consecutive years (2014 and 2015) as the top recipient of foreign direct investment (FDI), Maharashtra’s share in FDI jumped sharply to 46 per cent in 2016 compared to 18 per cent in 2015 with major flows in sectors like services, real estate and infrastructure, computer hardware and software, telecom, motor vehicles and medicines. Over the past decade, Maharashtra and Delhi together have accounted for 50 per cent of total FDI equity flows in India. In 2016, their combined share improved further to 60 per cent while Tamil Nadu, Karnataka, Gujarat and Andhra Pradesh accounted for another 20 per cent, says a report from the Kotak group.

Mumbai has remained the favored investment destination, but regions like Vidarbha and Marathwada have also received huge push. Within Vidarbha, the textile park in Amravati attracted huge investment largely led by policy shift to have textile units only in cotton producing areas. However, the manufacturing sector failed to get any significant FDI in any of the state including Maharashtra.

UNCTAD has estimated that for the second consecutive year, India has outstripped the US ($58 billion) and China ($62 billion) with greenfield inward FDI announcements at $63 billion. This means Maharashtra got $29 billion FDI – 46 per cent of the total FDI – in 2016. With a 7.3 per cent share, Gujarat has leapfrogged Tamil Nadu and Karnataka to become the third highest recipient of FDI in calendar 2016. Key sectors witnessing inflows includes automobiles, engineering, metallurgy and auto components, Kotak has said.

The slowing e-commerce boom led to Maharashtra regaining the top slot in foreign investment. Much of the regional shift has been due to the e-commerce/start-ups segment losing steam in 2016, thereby slowing flows to states like Delhi, Karnataka and Tamil Nadu. Karnataka had witnessed a boom in e-commerce and start-ups in the last two years. However, interestingly, while FDI flows remained healthy in Maharashtra and Delhi, their rankings in the average score for implementation of reforms slipped two spots to 10th and by four spots to 19th rank respectively. On the other hand, Andhra Pradesh and Telangana topped the rankings last year, shifting Gujarat to the third spot. The national average score for implementation of reforms (pre-requisite for ease of doing business ranking) at 48.9 per cent for the year ended October 2016, as against previous year’s average of 32 per cent.

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