Foreign investment in Gujarat surges 54% to $3.36 bn

Things have never been better for Gujarat, at least as far as Foreign Direct Investment (FDI) is concerned. Official statistics reveal that FDI in Prime Minister Narendra Modi’s home state surged by more than 50 per cent to an all-time high of $3.36 billion (Rs22,610 crore) in Financial Year 2016-17. In the process, Gujarat leapfrogged two other states, which have traditionally been ahead of it, to become the third most attractive FDI destination in the country.

Statistics released by the Department of Industrial Policy and Promotion (DIPP) show Gujarat attracted $3.367 billion FDI in 2016-17, a sharp rise of 54 per cent over $2.24 bn (Rs14,667 crore) in 2015-16.

“FDI inflows in the state in 2015-16 were at all-time highs, which means the state has achieved record FDI for the second straight year in 2016-17,” said an official.

Gujarat’s share of the country’s total FDI pie has increased to 7.75 per cent in 2016-17, sharply higher than the 2-3 per cent share for the past several years.

Management consultant Nayan Parikh attributes the sharp rise in FDI inflows to the state’s growing visibility.

“The prime minister himself has been promoting Gujarat on the big stage, and this is showing in the results. The Vibrant Gujarat Summit is also helping the state catch investors’ attention,” Parikh said.

India’s FDI inflows

2014-15
$30.93 bn

2015-16
$40.00 bn

2016-17
$43.48 bn

(FDI statistics; All figures in dollars in billions: Source: DIPP)

Last year, Gujarat was ranked fifth in attracting FDI, after Maharashtra, Delhi, Tamil Nadu and Karnataka. This year, it has leapfrogged the two southern states.

State’s Industries Commissioner Mamta Verma said the number of sector-specific policies announced by the state government in the last couple of years have helped in attracting the record FDI.

“We have seen huge FDI inflows in automobiles, engineering, metallurgy, auto components and other segment. A lot of investment has come from Japan. The MoUs signed at Vibrant Gujarat Summits have also contributed in higher FDI,” Verma said. 

The DIPP statistics show FDI in India surged to $43.48 bn (Rs2.91 lakh crore) in 2016-17, an increase of a little over 9 per cent from $40.00 bn in the previous year. Official sources attribute the rise in FDI inflows to the government’s decision to open up several sectors for 100 per cent FDI under the Automatic Route, and aggressive marketing of India as an attractive investment destination under the ‘Make In India’ campaign.

Nayan Parikh said the actual FDI coming into the state would be even higher. “There are several corporates which have manufacturing facilities in Gujarat, but are headquartered in other states. In such a scenario, even if the investment is taking place in Gujarat, the FDI would reflect in the other state,” he said.

Power minister Piyush Goyal had alluded to the same at a seminar at the Vibrant Gujarat Summit in January 2017.

DIPP statistics show that Tamil Nadu and Karnataka fared exactly the reverse of Gujarat in the last financial year as FDI inflows dipped sharply by close to 50 per cent.

FDI in Tamil Nadu fell from $4.53 bn in 2015-16 to $2.22 bn in 2016-17, while that in Karnataka declined from $4.12 bn to $2.13 bn, according to DIPP. There has also been a change at the top. Maharashtra with $19.65 bn has overtaken Delhi ($5.88 bn), which was the top state in the last two years.