The first seven months of the landmark ‘Make in India’ initiative saw Foreign Direct Investment (FDI) soaring by 48%, said a media update from India’s Ministry of Commerce and Industry. Foreign Institutional Investors (FIIs) channeled a record $40.92 billion into India from October 2014 to April 2015, an unprecedented 717% FDI upsurge in the year-on-year period.
Prime Minister Narendra Modi had launched Make in India on Sept. 25 2014, as a major development and employment generator. ‘Make in India’ aimed to make the country a quality global manufacturing and investment hub. The FDI upsurge will continue with the latest tax sops for manufacturers choosing India, such as mobile phone and lap top makers, in one of the world’s largest electronic markets.
Major ‘Make in India’ infrastructure projects like the Delhi Metro featured in the KPMG survey of the ‘100 Most Innovative Global Projects’, alongside New York City’s Resilience Plan, Moscow-Kazan High Speed Rail, Beijing International Mega-Airport and Brazil’s Transcontinental Railroad. Under the ‘Economic Powerhouses’ category, a multinational panel of KPMG judges listed 30 key public infrastructure projects from the US, India, Russia, China and Brazil that are open to private investment.
India’s Commerce Ministry said the record FDI upsurge indicated growing trust of global investors in the country’s economy, and in latest reforms to cut red tape. “A number of regulations and procedures were either done away with or eased,” said a Government of India update, July 16, as part of the ‘Make in India’ initiative. “Foreign investors have now shown unprecedented interest for investment in the manufacturing sector”.
A key ‘Make in India’ project is the Delhi-Mumbai Industrial Corridor (DMIC), with the 1,483 km long, high-capacity Dedicated Railway Freight Corridor (DFC) as is its backbone. The project aims to develop 24 new manufacturing cities along the Delhi-Mumbai Industrial Corridor, with each city given high quality infrastructure – improved power and water supplies, efficient public transport and waste management systems.
With a year 2019 deadline, the first phase has seven cities being developed – two in Maharashtra and one each in the states of Rajasthan, Uttar Pradesh, Haryana, Madhya Pradesh and Gujarat. The DMIC project, with the government of Japan as its partner, feeds significant nourishment to a geographically crucial sector of India’s economy. The DMIC states of Maharashtra, Rajasthan, Uttar Pradesh, Haryana, Madhya Pradesh and Gujarat contribute 43% of India’s GDP, over 40% of industries and industrial workers, and over 50% of India’s industrial output and exports. The new DMIC cities are expected to cope with increased pressures of urbanization, and lead India’s economic growth across the next two decades.
Japan features prominently in India’s new developmental and investment drive, such as the Investor Facilitation Cell of Invest India, a crucial liaison component in the ‘Make in India’ initiative. Invest India is also a part of the Japan Plus initiative created to deepen economic ties between India and Japan, and to fast-track investment proposals between two of Asia’s largest economies.
Aviation, biotechnology, electronics, railways, space industry and renewable energy feature in over 20 ‘Make in India’ sectors open to foreign direct investment. While most sectors need central governmental clearance for FDI, the crucial tourism sector has been happily clubbed in the ‘automatic investment’ category.
India has vastly under-used tourism potential, even though the country offers one of the most geographically diverse holiday options – the world’s highest and longest mountain range of the Himalayas, a 7,517 km (4,671 mi) long coastline filled with seaside resorts and secluded beaches, the Ganges and coastal rivers, tropical and alpine forests, adventure sport hubs and ancient cities, including 30 World Heritage sites.
Tourism contributes 6.8% of India’s GDP, brings US$ 18.13 billion in foreign exchange earnings annually, the third-highest foreign exchange earner in the country. While hosting one billion domestic travelers, India registered only 6.97 million foreign tourist arrivals in 2013, a modest annual growth of 5.9% over the previous year. India is the 16th most visited country in the world, with a share of 1.56% in the world’s tourism takings.
“In 2014, tourism continued to be a key driver of the global economic recovery, and a vital contributor to job creation, poverty alleviation…” said the United World Tourism Organization (UNWTO). India featured in the UNWTO list of world’s top 10 countries with double-digit tourism growth: the US (+11%), Macao (China) (+10%), UK (+18%), Thailand (+28%), Hong Kong (China) (+21%), Turkey (+13%), India (+13%), Japan (+23%), Greece (+15%) and Taiwan (Pr. of China) (+12%). But only Thailand in Asia had a high of 25% tourism industry growth in the first four months of 2015. The UNWTO though expects the travel and tourism industry in India to grow by 8% annually until 2016.
Tourism in India, particularly domestic tourism, could see unprecedented growth thanks to a historic Indian governmental decision last week to open investment in railway infrastructure to 100% FDI under the ‘Automatic’ route.
The Indian Railways, the world’s eighth largest employer with 1.4 million people in its payroll, now estimates a record $120 billion investment in the next five years for upgrading and expanding its network. Four hundred railway stations across India are due for an elaborate upgrade, through a transparent e-bidding process – good news for 13 million daily passengers on Indian Railway, an entity seen as a vital sector in the gradually, steadily evolving world’s seventh largest and the fastest growing economy.