'Govt's manufacturing push not yielding results; FDI continues to chase less-complicated services sector'
The Hindu
Trend likely because doing business in the services sector is less complicated than doing business in the manufacturing sector in India, says Ind-Ra; ‘services FDI increased to $153.01 billion between April 2014 and March 2022 from $80.51 billion between April 2000 and March 2014’
Despite the central government's high-octane push to boost manufacturing through the 'Make in India' initiative, foreign investors continue to chase bets in the services sector, a domestic rating agency said on Wednesday.
India Ratings and Research also said a bulk of the foreign direct investment (FDI) in manufacturing was not greenfield or fresh investments.
“Despite the government's effort to attract more investments in the manufacturing sector through 'Make in India' campaign, the FDI inflow is still tilted in favour of the services sector,” the rating agency said.
“This could be because doing business in the services sector is less complicated than doing business in the manufacturing sector in India,” the agency, an arm of Fitch Ratings, said.
It said services sector FDI increased to $153.01 billion in the services sector during April 2014 to March 2022 from $80.51 billion during April 2000 to March 2014, while the increase in manufacturing was less fast at $94.32 billion as against $77.11 billion.
The agency pointed out that in 2014, India had unveiled a flagship programme called 'Make in India' to facilitate investments across sectors, but with a special focus to build a world-class manufacturing sector and followed it up with the PLI scheme across 14 manufacturing sectors.
The services sector accounted for the highest share in FDI between 2000-2014 as well, the agency said, adding that within services, trading, telecommunications, banking/insurance, IT/business outsourcing and hotels/tourism are the favourites.
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