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

SECONDARY DATA-BASED ANALYSIS
6.3.4 Employment Generation
The total number of people employed in FDI plants is about 15,64,920 (Table 6.34).11 This amounts to a share of
between 4 and 5 per cent of the total labour force in the formal sector.12 More than 50 per cent of the total employment
in the FDI manufacturing sectors originates in small cities. The top-25 NIC 3-digit sectors account for 80 per cent of
the total FDI employment in large cities and 86 per cent of the total FDI employment in small cities. The share of
employment in small cities varies across NIC sectors; it is relatively high in sectors where employee cost is higher than
the overall average of 45 per cent originating in small cities.
Two sectors that provide relatively high shares of total employment in FDI plants include chemical products (242) and
growing and processing crops, including tea and horticulture (011). While 3-digit NIC Sector 242 provides employment
to about 16 per cent of the total employment in FDI firms, the corresponding value for NIC Sector 011 is about 14 per
cent. While 49 per cent of the employment generated by chemical products originated in small cities, the corresponding
proportion is 93 per cent in processing crops, including tea and horticulture (011).
Employment originating in FDI manufacturing firms varies widely across states (Table 6.35). About 20 per cent of the
total employment is in Maharashtra. The corresponding share is 12.5 per cent in Karnataka, 8.8 per cent in West Bengal,
7.4 per cent in Haryana, 6.9 per cent in Assam, 6.3 per cent in Tamil Nadu, 6.2 per cent in Gujarat and 5.8 per cent in
Andhra Pradesh. These eight states account for about three-fourth of the total manufacturing FDI sector employment.
Other states account for lower employment shares.
While Maharashtra has only about 19 per cent of the total employment in FDI plants in small cities, the proportion is
nearly 100 per cent in the case of Assam. The corresponding proportion is 21 per cent in Karnataka; 82 per cent in
Haryana; 39 per cent in Tamil Nadu; 57 per cent in Gujarat; and 40 per cent in Andhra Pradesh. Thus, FDI plants in
Assam, Gujarat and Haryana have relatively high proportions of employment in small cities.
6.3.5 Export Intensity
FDI firms account for 13 per cent of the total sales turnover and 12 per cent of export by all firms, both domestic and
FDI (Table 6.36). FDI firms have a sales turnover of Rs, 2,994 billion out of the total sales turnover of Rs. 22,665 billion
(FDI and domestic firms taken together). Exports of FDI firms are valued at Rs. 378 billion out of total exports of
Rs. 3,069 billion. While some sectors have a relatively low share of the contribution of FDI firms in total sales turnover
and exports, others have relatively high corresponding shares. FDI firms in 3-digit NIC sectors including refined
petroleum products (232), basic chemicals (214) and textiles (171) contribute sectoral shares much lower than the overall
averages in sales turnover and exports. However, FDI firms play an important role in sectoral sales turnover and exports
in sectors such as chemical products (242); electricity distribution and control apparatus (312); medical appliances and
instruments (331); motor parts (343); dairy products (152); transport equipment (359); mining of iron ores (131); and
electrical equipment (319).
About 13 per cent of total sales of FDI firms are exported. This is referred to as “export intensity”. Some sectors have a
relatively high share of exports in total sales, while others are on the low side. The corresponding share in some of the
important sectors is 80 per cent in mining of iron ores (131), 50 per cent in basic precious and non-ferrous metals (272),
31 per cent in software publishing, consultancy and supply (722), 26 per cent in textiles (171) as well as in special purpose
11.This number is computed by adding sectoral employment. Sectoral employment is computed as the ratio of sectoral employee cost to sectoral wage rate;
sectoral wage rate is taken from the Annual Survey of Industries (ASI), Government of India. This may be an approximation but we could not arrive at
a better estimate.
12.Based on 40 per cent workers' participation rate and 8 per cent share of the organised sector.
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