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Industry chamber Indian Chambers of Commerce and Industry (FICCI) has called for an elaborate action plan to increase Foreign Direct Investment (FDI) in the manufacturing sector. According to a recent study, since January 2000 to September 2008, India has been able to attract an average FDI of $3.4 bn per year in the manufacturing sector as against $40 bn FDI in China.
According to FICCI, though India is practicing a liberal policy for the inflow of FDI in its manufacturing sector and has a huge domestic market, such investments still remain much below the market potential. It said, “While over 67% of China’s total FDI goes to the manufacturing sector, it is only 37% in the case of India. The country needs an action plan, which would help in attracting FDI of $12 billion per year in the manufacturing sector alone, for the next five years. This target could also be scaled up in subsequent years.”
FICCI has also identified additional areas where gaps need to be fixed to attract higher investments. These include sub-sectors such as industrial machinery, agricultural machinery, ship building, medical & surgical devices and computer hardware.
Due to insufficient domestic capacity to produce machinery in larger quantities, India is continuing to import it to meet demand. According to FICCI, an inherent advantage of FDI is the transfer of technology to India. However, it has not taken place to the extent it was expected especially in the small and medium enterprises (SME).
According to FICCI press Release, “As part of the action plan, it is recommended that measures such as adopting ‘swap technology for market’ policy as is the case in China, rationalizing complex regulatory procedures and reducing delays in project approvals are taken to attract more investments.” Source: Economic Times
January 2, 2009
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