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

FDI IN INDIA AND ITS GROWTH LINKAGES
7.4 Major Findings
� Of the sample of 284 surveyed firms, there is a concentration of firms in the North and South zones followed by the
West zone, with few firms in the East zone. The maximum number of manufacturing firms is located in the North
and South zones, whereas the maximum number of service firms is in the South zone, with the majority of firms
being in the large cities. Of the 284 firms, 129 are manufacturing firms and 155 are service firms. The zone-wise and
sector-wise distribution of sample firms shows that nearly 83.5 per cent of the firms are in large cities, whereas only
16.5 per cent of the firms are in small cities.
� There are 138 firms with foreign equity holding of more than 50 per cent, 127 firms with foreign equity holding of
10-50 per cent and 19 firms with foreign equity holding of less than 10 per cent. However, there is a larger number
of service firms (86) with foreign equity holding of more than 50 per cent vis-à-vis manufacturing where only 52
firms have foreign equity holding of more than 50 per cent. Among the zones, the West zone has the maximum
number of firms with foreign equity holding of more than 50 per cent and all of them are in large cities.
� Nearly 46.2 per cent of the firms in large cities are listed and the remaining 53.8 per cent firms are unlisted. On the
other hand, in small towns listed firms accounted for 33.3 per cent, whereas unlisted firms accounted for 66.7 per
cent. Between the NSE and the BSE, more companies in both services and manufacturing are listed on the BSE
than the NSE.
� Of the sample of 155 service firms, 139 service firms are located in large towns, whereas only 19 service firms are
located in small towns. The maximum number of service firms are in the South zone in large cities (47) followed by
Maharashtra (45) in large cities. The maximum number of service firms relate to other services (93), followed by nonfinancial
services, which have about 32 service firms. In manufacturing, out of 129 firms, 98 are located in large cities
and the remaining 31 firms are located in small cities. As per zone-wise classification, the South zone has 36 FDIenabled
firms located in large cities followed by the West, North and East zones. Similarly, among FDI-enabled
firms in small cities, the North zone has a higher number of firms followed by the South zone and data for the
remaining zones was not reported.
� The majority of the firms report that road transport is the most important means of transport to the closest urban
centre or metro. Across zones, a large number of service firms and manufacturing firms mentioned that the quality
of transport to the nearest urban centre from the plant/facility was good.
� Nearly 60 per cent of the service firms belong to Other services, and most of the service firms are located in large
cities, compared to small cities in all zones
� Most manufacturing firms are located in large cities with the maximum number of firms being capital-intensive.
� Overall, nearly 51.5 per cent of the employees in 254 firms are employed in manufacturing firms vis-à-vis 48.5 per
cent in service firms. The percentage of females employed in service firms is greater in large cities (13.1 per cent),
whereas the percentage of females employed is greater in manufacturing firms in small cities (23.0 per cent). Thus,
large cities provide more employment to women in service firms, whereas a large percentage of women are gainfully
employed in manufacturing in small cities.
� The number of employees per firm is greater in large cities in both manufacturing and services vis-à-vis small cities.
� The presence of FDI-enabled firms is concurrent with the existence of schools, colleges and hospitals within a radius
of 10 km. This scenario is similar across zones except for the East zone, where data for small cities is not available.
� Both manufacturing and service firms mention that the setting up of an FDI firm has led to improved infrastructure
in the area; however, this is truer for large towns than small towns. The majority of the small towns mentioned that
the setting up of an FDI firm has not led to improvements in infrastructure in the area. �
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