fdi in india and its growth linkages - Department Of Industrial Policy ...

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Chapter 10: Key Findings and Salient Conclusions 1 1. Spatial Spread: To take stock of the spatial spread of the FDI-enabled production facilities in India during the past five years (2001 to 2006). The production facilities to be studied include manufacturing plants as well as serviceproviding facilities as these evolved either as greenfield or as M&A processes, located in cities other than metros and Tier 1 cities, and in rural areas, in particular. Findings � 401 FDI-enabled manufacturing firms; 1,273 plants; 294 cities � 84% of 294 cities are Class-3 � 54% of 1,273 plants located in Class-3 cities � 20% manufacturing plants in Maharashtra; 11% in Gujarat; 10% in Tamil Nadu; 9% in Karnataka; and 7% in West Bengal � The state-wise share of Class-3 cities in all cities having FDI-enabled manufacturing plants: 90% in Gujarat; 87% in Andhra Pradesh; 85% in Tamil Nadu; 82% in Karnataka; 67% in Maharashtra � 100 FDI-enabled service firms; 1,257 facilities; 369 cities � 84% of 369 cities are Class-3 � 35% of 1,257 facilities are located in Class-3 cities � 20% service facilities in Andhra Pradesh; 18% in Karnataka; 17% in Maharashtra; 12% in Tamil Nadu � The state-wise share of FDI-enabled service facilities located in Class-3 cities: 61% in Andhra Pradesh; 43% in Karnataka; 18% in Tamil Nadu; and 3% in Maharashtra Conclusions FDI-enabled plants are spread across various states with relatively high concentration in Maharashtra, Gujarat, Tamil Nadu, Karnataka and West Bengal. A significant proportion (54 %) of manufacturing plants is located in Class-3 cities. FDI-enabled service facilities have relatively high concentration in Andhra Pradesh, Karnataka, Maharashtra, and Tamil Nadu. The proportion of service facilities located in Class-3 cities is relatively less significant (35 %) vis-à-vis manufacturing plants. 2. Sectoral Clustering: To bring out the sectoral clustering across states and sub-state regions (cities, towns and rural areas of districts) with a view to assessing the types of production facilities which have entered relatively small towns and rural areas outside municipal limits (2006 to 2008). Findings � 351 firms with 1,171 plants have reported recent data � Plants widespread across states � Foreign equity: Rs. 56 billion � Foreign equity worth Rs. 49 billion in FDI-enabled manufacturing firms (41% of total equity in FDI-enabled manufacturing firms and 88% of the FDI received in manufacturing sector); 44% of Rs. 49 billion worth of foreign equity has moved to Class-3 cities 1. Discussion in this section is based on information drawn from various chapters of this report. Special focus has been given to the secondary data-based tables, including Tables of Chapter 6. 133
FDI IN INDIA AND ITS GROWTH LINKAGES � Market capitalisation of FDI-enabled manufacturing firms at Rs. 4,870 billion; 46% originates in Class-3 cities � Firms included in the top 25 National Industrial Classification (NIC) 3-digit sectors, based on market capitalisation of FDI-enabled firms, account for 90% of the total market capitalisation � The top 5 NIC 3-digit sectors based on market capitalisation include firms producing chemical products (other than basic chemicals); non-ferrous metals; electricity distribution & control apparatus; motor vehicles; and non-metallic mineral products � Market capitalisation of firms producing chemical products (other than basic chemicals) has high clustering in Maharashtra, Karnataka, West Bengal, Himachal Pradesh and Goa � Market capitalisation of firms producing precious and non-ferrous metals has high clustering in Maharashtra, Dadra & Nagar Haveli, Tamil Nadu, Madhya Pradesh and Andhra Pradesh � Market capitalisation of firms producing electricity distribution and control apparatus has high concentration in Maharashtra, Karnataka, Gujarat, Haryana and West Bengal � About 46% of the market capitalisation and 50% of the net fixed capital of the FDI-enabled manufacturing firms originate in Class-3 cities. The corresponding number is 44% for the foreign equity component � Sectors with a relatively high share of market capitalisation in Class-3 cities include non-ferrous metals; non-metallic mineral products; dairy products; basic iron and steel; and transport equipment � Sectors with a relatively low share of market capitalisation in Class-3 cities include electricity distribution and control apparatus; medical appliances; general purpose machinery; and tobacco products � States with a relatively high share of market capitalisation in Class-3 cities include Andhra Pradesh, Assam, Haryana, Rajasthan and Uttar Pradesh � Maharashtra has a relatively high clustering of market capitalisation of sectors including chemical products; nonferrous metals; and medical appliances � Karnataka has a relatively high clustering of market capitalisation of sectors including motor parts; chemical products; and electricity distribution and control apparatus � Haryana has a relatively high clustering of market capitalisation of sectors including transport equipment; motor vehicles; and electricity distribution and control apparatus � Gujarat has a relatively high concentration of sectors including electricity generation and control apparatus; nonmetallic mineral products; and chemical products � Tamil Nadu has a relatively high concentration of non-ferrous metals; petroleum products; and dairy products � The estimated market capitalisation of the foreign equity component in total equity in the manufacturing sector is Rs. 2,462 billion in the case of FDI-enabled firms � Foreign equity worth Rs.18 billion in FDI-enabled service firms (31% of the total equity in FDI-enabled service firms); only 8% of Rs. 18 billion worth of FDI has moved into small cities � Market capitalisation of FDI-enabled service firms at Rs. 2,956 billion; only 5% originates in Class-3 cities Conclusions Foreign equity in FDI-enabled manufacturing sectors has relatively significant penetration (44 %) in Class-3 cities compared with that in service sectors (8 %). The same is true for market capitalisation and net fixed capital. Sectors with a relatively high share of market capitalisation in Class-3 cities include non-ferrous metals; non-metallic mineral products; dairy products; basic iron and steel; and transport equipment. States with a relatively high share of market capitalisation in Class-3 cities include Andhra Pradesh, Assam, Haryana, Rajasthan and Uttar Pradesh. 3. Depth of Value-Added: To enable a comprehensive understanding of the value-added features of the FDI-linked production facilities and its role in employment opportunities. 134
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FDI IN INDIA AND ITS GROWTH LINKAGE
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PROJECT TEAM Study Team Project Lea
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linkages with the economy. The sect
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Contents Executive Summary Chapter
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Chapter 5: FDI: Linkages with the E
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Executive Summary Foreign direct in
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EXECUTIVE SUMMARY petroleum product
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Chapter 1: Introduction 1.1 Backdro
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section industry data. However, the
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in India stood at $23 billion, show
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viii) Backward and Forward Linkages
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Chapter 2: FDI Scenario in India: T
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Secretariat for Industrial Assistan
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Table 2.2 shows that FDI outflows f
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at about 2 per cent or less of the
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Table 2.5 Sector-wise Break-up of F
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Table 2.7 FDI in India in the Servi
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Figure 2.4 Country-wise FDI Inflows
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2.10 Foreign Technology Transfers A
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Chapter 3: Mergers & Acquisitions a
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Table 3.2 Short-term effects of FDI
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proportion of foreign investment in
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Chapter 4: Special Economic Zones (
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4.4 Management of SEZs SEZs are und
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in the eight major SEZ’s exports
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Foreign Direct Investment in SEZs S
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In a span of a few years, there hav
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SPECIAL ECONOMIC ZONES (SEZS) AND F
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existing infrastructure, (b) exploi
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Chapter 5: FDI: Linkages with the E
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construction (4200); fuels, includi
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FDI: LINKAGES WITH THE ECONOMY S. N
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Table 5.5 Sector-wise FDI in India
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Chapter 7: Primary Survey: Analysis
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the North and South zones, whereas
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PRIMARY SURVEY: ANALYSIS AND RESULT
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Table 7.1a Distribution of Surveyed
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Questionnaires
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