Investments in India

• 22 Jul 2020

Why in News

According to a recent survey by Projects Today, overall fresh investment announcements in India slumped to the lowest in five years in the first quarter of the financial year 2020-21.

• The period saw extended pandemic-induced lockdowns.
• During this time, Tamil Nadu emerged as the country’s top investment destination.
• Projects Today is an independent firm that tracks investment projects in the country.

Key Points

• Investments improved every passing month in the quarter (April to June).
  
  • In April, there was an announcement of 260 new projects worth Rs. 20,181.6 crore.
  • In May, it rose to 436 new projects worth Rs. 37,922 crore.
  • In June, after the announcement of Unlocking 1.0 of the economy, there was a further surge in the number of new projects. In all, the month saw the announcement of 545 new projects with a total investment of Rs. 39,755.43 crore.
    
    • Reliance secured investments from some of the world’s largest firms such as Google, Facebook (Jio-Facebook Deal) and Intel.
• However, fresh project expenditure from Central government agencies dipped in June 2020, though it is expected to rise in coming months.
  
  • With falling revenues due to the lockdown and mounting expenses due to the pandemic, the government has blocked the initiation of approved/appraised new schemes by various ministries and departments for the next 9 months or till 31^st March 2021.
    
    • Atmanirbhar Bharat and Pradhan Mantri Garib Kalyan Yojana have been insulated from the expenditure cut measures.
  • The coming quarters will also demonstrate the efficacy of the Centre’s stimulus packages, that included financial and fiscal reforms along with steps to enhance the agriculture and small scale industries, in attracting foreign and domestic private capital.
• Investment projects were largely dominated by the government sector and private promoters also announced new projects.
• Apart from investments, fresh capacity additions are expected in the healthcare and pharma sectors with immediate effect.
  
  • Covid-19 has led companies to do intensive research for its vaccinations which need fundings.
  • The pandemic gave boost to the production of Personal Protection Equipment (PPEs), masks, sanitisers etc. because of more emphasis on personal hygiene and products related to it.
  • Development of various anti-viral and immunity boosting medicines also went up.
• States like Tamil Nadu and Maharashtra held investors meet and signed MoUs, Uttar Pradesh, Madhya Pradesh and Karnataka reworked labour laws, started building land banks and sent proposals to foreign companies.
• Major Challenges: Country’s slow-moving official machinery, archaic land and labour laws are some of the things preventing foreign companies from bringing in their technology and capital to India.

Case of Tamil Nadu

• It accounted for 18.63% of the Rs. 97,859 crore of investments envisaged to execute 1,241 projects in the country in the first quarter.
• The state is also host to three of the five data centres envisaged to come up in the country at a total investment of Rs. 7,400 crore.
  
  • The other two data centres are proposed in Maharashtra, which was second to Tamil Nadu with fresh investments worth Rs. 11,228.8 crore.

Way Forward

• India has the required labour force in abundance and it is high time that all the concerns are addressed as soon as possible at the central and state governments level.
• India has all the potential to be the contract manufacturer of the world in areas such as automobile ancillaries, smartphones, electronic items, capital goods, food processing, pharmaceuticals, chemicals, etc.

Source: TH