FDI growth slows as Make in India limps

Prime Minister Narendra Modi’s flagship ‘Make in India’ and ‘Ease of Doing Business’ initiatives notwithstanding, India’s foreign direct investments (FDI) growth has slowed to a minuscule 1.23% in 2018 from a high of 20.16% in 2014 when the BJP-led government took over at the Centre.

A data set weaved into an answer to a written question by Minister of State for Finance Pon Radhakrishnan in the Lok Sabha showed a consistent decline in FDI growth in percentage terms in the past three years since 2015-16.

A commerce ministry data viewed separately for 2014-15 showed that FDI growth in the same year was at a multi-year high of 20.16%.

The decline in FDI growth was more precipitous in FY18, implying the initiatives such as ‘Make in India’, launched immediately after the NDA government came to power in 2014 and, ‘Ease of Doing Business’ taken up subsequently, could not deliver as desired.

Another data series on manufacturing, the fulcrum of Make in India programme, showed a tepid growth in the past four years of the NDA government.

India received close to $60.9 billion in FDI in financial year 2017-18, up from $60.2 billion in the previous year. In percentage terms, the growth was a minuscule 1.23% year on year.

The FDI growth was a little better at 7.73% in FY17 over FY16. But prior to that, in FY15, India’s FDI inflows had grown at 18.73%.

The Centre had taken various initiatives under the NDA government to boost investment which included a fillip to manufacturing, reforms in transport and power sectors as well as urban and rural infrastructure.

Programmes such as Make in India, Start-up India, Stand-up India, Skill India and Digital India were undertaken to improve India’s competitiveness globally and bolster FDI inflows.

However, Make in India, with manufacturing at the centre, was conceived as one which could contribute immensely to the country’s exports.

The then Reserve Bank of India Governor Raghuram Rajan had warned the government to instead focus on ‘Make for India’ as the world as a whole was unlikely to accommodate another export-led growth like China.

With global growth sliding by the day, Make in India is yet to take off and FDI is back to a lower single-digit growth.