Industrial investment may be pouring into Gujarat but it continues to lag behind other industrialised states of the nation in attracting Foreign Direct Investment (FDI).
Industrial investment may be pouring into Gujarat, and the state may be growing at a fast rate, but it continues to lag behind other industrialised states of the nation in attracting Foreign Direct Investment (FDI). This is evident from the state’s lowly share of only 2.5% of the total FDI inflows in the country between April and August in the current year.
Data released by the Union department of industrial policy & promotion shows that Gujarat attracted FDI of Rs1,908 crore ($426 million) in April-August 2011 and was ranked fifth among all states in this area.
The total FDI in the country, in the same period, stood at Rs77,864 crore ($17.37 billion) which means that Gujarat attracted only 2.5% of the total inflows. This, at a time, when FDI inflows in the country have nearly doubled when compared with the previous year. Maharashtra, which is planning an industrial policy on the lines of Gujarat to attract investment, attracted FDI to the tune of a whopping Rs28,124 crore ($ 6.26 billion), i.e. 36% of the total inflows.
Delhi, parts of UP, and Haryana, attracted Rs22,272 crore ($ 4.98 billion) worth of FDI, i.e. around 29%.
Minister of state for finance, Saurabh Patel, said that Gujarat was poised to attract higher FDI.
A senior government official, requesting anonymity, said, “The major industrial investments, which are driving Gujarat’s growth, are from domestic sources. FDI in the state has been traditionally lower. However, inflows this year are likely to be much higher than in previous years.” He pointed out that FDI inflows in the state are set to go up over the next few months after automobile majors Ford and Peugeot start work on their car manufacturing plants. Both the companies have announced investments of Rs4,000 crore over three years.
Gujarat had attracted FDI to the tune of Rs3,294 crore in 2010-11, while it was worth Rs3,876 crore in 2009-10. Officials said that FDI inflows this year would be significantly higher. According to DIPP, Karnataka attracted FDI worth Rs3,844 crore ($ 858 million) in the same period, the third highest, followed by Tamil Nadu with Rs3,177 crore ($715 million ). Andhra Pradesh was ranked sixth with FDI of Rs1,836 crore ($412 million), while West Bengal attracted FDI to the tune of Rs1,393 crore ($312 million).
The sector-wise breakup of FDI in different states was not available, but the highest investments were in the services sector, telecommunications, drugs & pharma, automobiles, computer software & hardware, power and petroleum among others.
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