Industrial Investment In India Declines In 2014

The industrial investment in India has witnessed a sharp decline in the calendar year 2014. According to data released by Department of Industrial Policy & Promotion (DIPP) by ASSOCHAM, the industrial investment has dipped by 20% year-on-year as against the proposed industrial investments.

“India received 1,421 industrial investment proposals worth Rs 362,805 crore in this calendar year till September which had declined significantly from 1,906 proposals worth Rs 451,643 crore in the corresponding period last year,” said DS Rawat, general secretary of ASSOCHAM.

In terms of regions, Chattisgarh has the largest chunk of the investment pie with almost 45% of the total amount of the proposed investments. The state has received 24 investment proposals worth Rs 161,836 crore from Rs31, 067 crore thus registering year-on-year growth rate of over 420%.

“It is followed by Maharashtra (8.9%), Gujarat (8.8%), Odisha (5.9%), Karnataka (5.4%) and Andhra Pradesh (5.1 %) are other leading states in terms of share. However, Madhya Pradesh, Odisha and Gujarat have registered significant decline in their share in total investment proposals,” noted Rawat.

Other states that have recorded considerable growth in the proposed investments include Punjab (184%), Karnataka (166%), Himachal Pradesh (108%) and Assam (25%).

Sectors such as services, construction development, telecommunications, computer software and hardware, drugs and pharmaceuticals, automobiles, chemicals (other than fertilizers), power, metallurgical industries, hotel and tourism attracted the highest percentage of foreign direct investment in 2014.

“Considering the growing competition between emerging economies for foreign investments, FDI is highly imperative for India considering that it has completely transformed the quality, productivity and production in sectors it has been allowed and can supplement domestic efforts significantly,” added Rawat.

However, bureaucratic interference, restriction of FDI limit in certain sectors along with a complex tax structure has posed as a serious threat to India’s image as an investment destination. “Besides, bureaucratic delays and process vis-à-vis plethora of Governmental approvals and clearances involving various ministries must be fastened to increase the absorption of FDI in India. Government must recognize that good regulations and efficient processes are key catalysts for FDI as accessible and reliable information together with efficient and predictable actions by public institutions help create a business environment conducive to investment,” he suggested.

Currently, the US, Singapore, UK, Japan, Netherlands, Mauritius, Cyprus, Germany, France and Switzerland are top investing countries in India.