Electronics to chemicals: Govt identifies critical sectors to boost FDI

The government has identified critical sectors, including electronics, chemicals, leather and footwear, and toys, where value chains can be strengthened to facilitate and drive foreign direct investment (FDI) into the country.

Invest India, the investment promotion and facilitating agency under the Department for Promotion of Industry and Internal Trade (DPIIT), has been actively identifying key value chains to focus on.

“Invest India has been systematically working on identifying which are the value chains we should be working on, identifying companies for those value chains and then approaching those companies for bringing in investments,” a senior government official said.

For instance, in sectors such as electronics, the government has already taken steps to incentivise manufacturing, which in turn is helping in attracting more investments, and building more resilient supply chains within the country, the official said.

Besides, the government is also witnessing a visible trend of diversifying the supply chains because there’s a realisation that depending only on one country is risky.

“There are certain sectors where many big companies are exploring diversification.

"In our meetings with some of the companies, they have even indicated that they want to shift a part of their supply chains, not the entire chain,” the official said.

That apart, DPIIT, the nodal ministry in charge of FDI policy and facilitation is also in touch with states, such as Maharashtra, Tamil Nadu, Andhra Pradesh and Karnataka, to provide them with support in order to facilitate more investments in the country.

The discussion assumes significance amid tepid investment flow into the country and the government has been trying to facilitate and attract more foreign investments.

During the financial year 2024-25, total FDI inflows saw 14 per cent year-on-year growth at $81 billion, according to the latest DPIIT data.

However, according to the latest data released by the Reserve Bank of India, cumulative net FDI in the first two months (April-May) of the current financial year was flat at $3.9 billion, compared to $4 billion during the same period a year ago.