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

Pradesh and Gujarat to as low as about 26 per cent in Maharashtra and Karnataka. Thus, there is a striking similarity
between the distribution and reach of domestic and FDI plants in Class-3 cities. This provides a strong indication of
economies of agglomeration across Class-3 cities in various states.
A further check on degree of association between the number of domestic and FDI plants in 244 matched cities has
been conducted through finding the correlation coefficient between the two variables at the all-India as well as the
state level. The correlation coefficient between city-wise distribution of domestic and foreign plants is 0.89,
suggesting that there is a strong linkage between the co-existence of domestic and FDI manufacturing plants (Table
6.16). Even though state-wise correlation is somewhat weak among less important industrial states, it is relatively
strong across the major industrial states, e.g., 0.99 for Karnataka, 0.97 for Andhra Pradesh, 0.96 for West Bengal, and
0.93 each for Gujarat and Maharashtra.
The details of names and characteristics of 50 unmatched cities that have 51 FDI manufacturing plants are provided
in Annex-1 of this chapter (given after 55 tables of this chapter). Similar details on 244 matched cities are provided
in Annex-2 of this chapter. Details of FDI manufacturing plants located across the country are provided in
Annex-3 of this chapter.
6.2.4 Service Firms’ Facilities
FDI-enabled service firms are spread over 369 cities across India, including 311 (84 per cent) Class-3 cities (Table 6.17).
Andhra Pradesh has the highest number of cities (126) with FDI-enabled service facilities; these include 121 Class-3
cities. Karnataka has 76 cities with FDI-enabled service facilities, of which 73 cities are Class-3. Other states have
significantly fewer cities in which FDI-enabled service facilities are located.
Of a total of 1,257 FDI-enabled service facilities, 35 per cent are located in Class-3 cities. The state-wise share of FDIenabled
service facilities located in Class-3 cities is 61 per cent in Andhra Pradesh; 43 per cent in Karnataka; 18 per cent
in Tamil Nadu; and 3 per cent in Maharashtra (Table 6.18).
6.3 Sectoral Details of FDI in Manufacturing Sector
The data of FDI firms/plants for more recent periods have been used to gauge the current economic performance of
these firms/plants. The period April 2006 – March 2008 has been used as the period of current reference to cull the
latest reported financial and operative data. As mentioned earlier, Capitaline cannot report data for all firms at a
single point of time, say March 2008, since it receives financial reports of the firms at different points of time and
some firms may not have reported their latest figures. The cut-off dates, viz., April 2006 and March 2008 have been
decided to include three consecutive years, viz., 2005-06 to 2007-08 to extract the latest available information on
FDI manufacturing firms and plants. This information has been used to study FDI agglomeration/clustering issues
as well as other performance indicators of firms and plants and NIC 3-digit sectors across states and cities. These
indicators include market capitalisation, equity, net fixed capital, output, employment, value-added and outputcapital
ratio and FDI sectoral intensity. 7 FDI-specific indicators have also been compared with the corresponding
domestic indicators.
6.3.1 Spread across States: Firms and Plants
We were able to retrieve the latest information on 351 FDI firms with 1,171 plants spread over 275 cities, thus implying
3.3 plants per firm on average. The corresponding information for domestic plants is available for 3,107 firms that have
8,485 plants spread over 958 cities (Table 6.19).
7. Net fixed capital has been taken as the book value reported in the balance sheets of the firms in our database.
SECONDARY DATA-BASED ANALYSIS
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