Context:
With net FDI inflows slowing down amid global economic uncertainty and international investors exiting through IPOs or repatriating capital, the Indian government—along with Invest India—has drawn up a sector-specific strategy to attract fresh foreign direct investment. This initiative aims to maintain India’s momentum as a global investment destination by facilitating new investments in sectors aligned with evolving global supply chains and domestic industrial priorities.
Key Sectors Identified for FDI Promotion
The government has shortlisted the following six sectors for targeted investor outreach:
- Electronics System Design and Manufacturing (ESDM)
- Focus on mobile phones, semiconductors, and components.
- Strong investor response due to the PLI scheme and global push to diversify from China.
- Firms like Foxconn and their vendors have invested heavily.
- Non-Leather Footwear
- Promoted as a labour-intensive export-oriented sector.
- Aligned with sustainability and synthetic material trends.
- Chemicals
- India positioned as a China+1 alternative for global chemical supply chains.
- Potential for specialty and agrochemical FDI.
- Medical Devices
- Government incentivizing domestic production under PLI schemes.
- Focus on reducing import dependence and becoming a global manufacturing hub.
- Toys
- Boosted by anti-China sentiment and government bans on unsafe imports.
- Policy support for MSMEs and design innovation hubs.
- Electric Vehicles (EVs)
- Growing demand domestically.
- Entry of firms like VinFast.
- Import concession scheme introduced to attract manufacturers.
Policy Measures and Facilitation Strategy
- Government aims to increase gross inflows through:
- Targeted value chain mapping.
- Ease of doing business initiatives and inter-ministerial coordination.
- PLI schemes and special tariff incentives to localize key components (e.g., motors, compressors, copper tubes).
- Active engagement with global investors through Invest India.
