Manufacturing FDI inflows jump 78% through February

Foreign direct investment (equities) inflows into the manufacturing sector jumped 78% through last February to $20 billion, far outpacing the growth pace of overall FDI, despite the pandemic blues , said the secretary of the Department for the Promotion of Industry and Internal Trade (DPIIT), Anurag Jain. said FE.

Gross foreign direct investment (FDI) — which includes FDI equity, reinvested earnings, unincorporated organization equity and other capital — stood at $76.9 billion through February last, Jain said in an interview.

Analysts expect total inflows in FY22 to have topped the record high of $82 billion in FY21, albeit marginally, albeit on a high basis. Investments, both foreign and domestic, remain critical to India’s economic resurgence as private consumption has maintained a roller coaster ride in the aftermath of the pandemic.

The rise in FDI in the manufacturing sector broadly matches the sector’s performance in gross value added (GVA) in FY22. After two successive years of contraction, GVA, according to the second advance estimate, is expected to grow by 10.5% in FY22. Manufacturing GVA contracted 0.5% in the prior year and 2.9% in the pre-pandemic year of fiscal 2020.

The PMI suggests that manufacturing activity accelerated in the second half of FY22. Private capex, long elusive, has also started to rise, particularly in sectors such as metals, mining, chemicals and electronics, Confederation of Indian Industry (CII) President TV Narendran recently told FE.

Asked whether the FDI regime will be further liberalized, the secretary said that most sectors of the economy have already been opened up and almost all inflows are allowed through the automatic route.

“India’s FDI regime is one of the most liberalized in the world. There are no proposals under consideration to further open up any sector, apart from what was announced in the budget,” Jain said.

A working group has been set up to suggest ways to build national capacity in the animation, visual effects, games and comics sector, in sync with the FY23 budget announcement. It will also recommend measures to boost FDI inflows into the sector. Last year, the government raised the limit on FDI in insurance companies from 49% to 74% under the automatic route, subject to certain conditions. Similarly, up to 100% foreign investment in the telecommunications sector was allowed under the automatic route in October 2021.

The Modi government has liberalized dozens of sectors in recent years. Gross FDI inflows in the seven years to FY21 jumped to $440.3 billion, after recording a 65% increase in the previous seven years (2007-14), said Jain.

To reduce India Inc’s burden, more than 30,000 compliance requirements have been removed across all ministries and states, Jain said.

“The decriminalization of petty offenses is another important pillar of the exercise, the aim of which is to ensure that businesses can operate without fear or anxiety of imprisonment for petty offences,” he added.

Asked about the rollout of the national e-commerce policy, the secretary said it was a “work in progress” and deliberations were continuing.

Commenting on the Open Network for Digital Commerce (ONDC), which was launched on a pilot basis on Friday, Jain said he expected the network to “attract many private players in their areas of expertise.” Given its open network, ONDC will significantly remove barriers to entry (in terms of the need for a huge upfront investment in building a platform) for budding entrepreneurs and other stakeholders . “Suppose a person is good at seller side management, he creates a seller application, logs into the network (ONDC) and starts onboarding sellers. He doesn’t have to worry about other aspects (like buyers , logistics, payment system, etc.),” Jain said ONDC is therefore moving beyond the current platform-centric e-commerce model, where buyers and sellers must use the same platform. -form or application to carry out a commercial transaction.

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