There seems to be a major slump in the flow of Foreign Direct Investment (FDI) into Gujarat,the state that is being marketed as the most desirable investment destination. The state not only saw a drop of 43% in the quantum of FDI flows into the state,but also ranked sixth among the states in attracting overseas investments in 2012-13,according to the latest figures by Department of Industrial Policy & Promotion (DIPP),Union Ministry of Commerce and Industry. Gujarat registered Rs 4,730 crore of FDI in 2011-12. However,it saw the numbers drop to Rs 2,676 crore during 2012-13.
Gujarat is behind states like Maharashtra,Delhi,Tamil Nadu,Karnataka and Andhra Pradesh that saw higher quantum of FDI inflows. Almost all of these states also saw a growth in FDI inflows in 2012-13. For instance,Tamil Nadu saw their FDI numbers double to Rs 15,252 crore from Rs 6,711 crore in 2011-12.
Maharashtra,with which Gujarat is mostly compared,clocked over 17 times more FDI than Gujarat. The FDI flow into Maharashtra grew to Rs 47,359 crore in 2012-13 from Rs 44,664 crore during the previous year.
While Maharashtras contribution to the cumulative FDI equity flow into the country is about 39%,the share of Gujarat,the state that holds biennial Vibrant Gujarat summits,is a little over 2% for the year 2012-13.
Among the top countries that have invested in FDI equity in Gujarat is Mauritius. The island nation contributed 50% of $7.96 billion that came to Gujarat between January 2000 and December 2011. USA (15%),Singapore (11%),Cyprus (5%) and United Kingdom (4%) are among the top sources of FDI in Gujarat.
Among the sectors that attracted maximum FDI has been Telecommunications (20%) and Power (14%). The other major sectors that contributed to FDI in Gujarat include Metallurgical industries (11%),Petroleum and Natural Gas (10%) and Services sector (9%).
The price of land in Gujarat has been a big turn-off for investors. Costly land contributes in a big way to fixed capital. If a company has to choose between Gujarat and Karnataka,it would opt for the latter where land is four-five times cheaper, says Bhagyesh Soneji,chairperson of Gujarat Council of ASSOCHAM.
Soneji said the lack of skilled manpower was also affecting investment flow in telecommunications and the services sectors of the state.