India has emerged as the world’s seventh-largest foreign direct investment (FDI) destination but the inflows are limited to a few sectors, with services grabbing a substantial chunk of them, according to a report by India Ratings & Research.
In fact, between April 2014 and March 2022, the shares of the services sector and computer software & hardware in the FDI inflows were as high as 41.3% and 19.6%, respectively, while manufacturing accounted for just 25.4%. In contrast, between April 2000 and March 2014, the share of the services sector and computer software & hardware in such inflows were 37% and 5.9%, respectively, and that of manufacturing was as much as 35.4%, the report showed.
This is despite the fact that the government launched initiatives like Make in India in 2014 to boost domestic manufacturing. In the wake of the pandemic, it has also announced 14 production-linked incentive schemes, although such schemes are expected to yield the intended results with a time lag.