“India may attract US$ 120-160 billion per year of foreign direct investment (FDI) by 2025, leading to an increase in the ratio of FDI to GDP from 3-4% to less than 2%, a CII and EY researchers reported. Over the past 10 years, the country has seen GDP rise 6.8%, with FDI increasing to GDP at 1.8%.
It reported that in terms of attractiveness, investors ranked India third, at least 80% have plans to invest in India in the next two to three years, and nearly 25% reported investments worth more than US$ 500 million, The Economic Times reported.
As per the report,’ FDI in India: Now, Next, and Beyond if investments come in, India’s GDP growth could also boost to 7-8% growth.
Traditionally, cars, chemicals, medicines, and pharmaceuticals have attracted a majority of 89% of FDI, but boosting electric vehicle (EV) manufacturing, high-end machinery manufacturing, and diversification of cotton textile and mining value chains in service and regionalization will assess FDI in post-COVID movements.
Maharashtra remains the most desirable destination, with 28% of the share, followed by Karnataka (19%), Delhi (16%), and Gujarat (10%). Between October 2019 and June 2020, these four alone captured 75% of the FDI, while the top 10 got 97%, it noted.
Focusing on making low-cost skill sectors attractive to FDI, could therefore also increase job prospects for the ‘huge labor force’ of India and expand investment to potential states, some of which, the report said, also hold larger populations.
Investors surveyed in the report mentioned that investment and attractiveness were affected by India’s workforce, political stability, cheap labor, and policy reforms.”