Uttar Pradesh Witnesses Strong FDI Growth and Export Surge

Uttar Pradesh has recorded a significant rise in Foreign Direct Investment (FDI), attracting $1.7 billion between 2019-2024, backed by policy reforms, skilled workforce, and growing exports across 215 countries.

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Context

  • Foreign Direct Investment in Uttar Pradesh (UP) has surged significantly in recent years, with the state government reporting significant growth between 2019 and 2023.

Key Points

  • Historical Challenges: Historically, UP struggled with a poor industrial ecosystem that discouraged foreign investors. A combination of factors contributed to this unfavorable environment, including:
    • Low rankings in Ease of Doing Business 
    • Absence of a streamlined single-window clearance system
    • Insufficient basic infrastructure
    • Unclear industrial policies
    • Unstable law and order conditions
  • Shift in FDI Trends: From 2000 to 2017, Uttar Pradesh's FDI was limited to only Rs 3,000 crore, but it has surged in recent years.
    • Uttar Pradesh is now the 11th most attractive state for FDI, with a total inflow of $1.7 billion from October 2019 to September 2024.
    • The state ranks first in India for the export of consumer electronics, hosting 196 Electronics System Design and Manufacturing (ESDM) companies currently operating within its borders.

Conditions that made it Possible

  • The state has a large and skilled workforce, which is a major advantage for exporters.
  • It is home to many educational institutions, including technical and engineering colleges, which provide training for a variety of skilled occupations.
  • UP has a major advantage with a population of around 24 crore and 56% of its population size in the working age group. The state’s per capita income has grown by 23% during 2016-20, according to Invest UP.

Exports From Uttar Pradesh

  • Uttar Pradesh contribution to India’s export share hovered in the range of 5.42% to 4.98% in the period of 2019-20 to 2021-22
  • It exports 163 commodities to 215 countries through 131 ports, according to DGCIS.
  • Uttar Pradesh exports have grown from US$ 16.24 billion during 2018-19 to US$ 21.68 billion during 2022-23. 

Diversity in Exports

  • As of 2022-23, the state’s exports were led by telecom products at US$ 4.42 billion followed by buffalo meat (US$ 1.8 billion), cotton (US$ 993 million),  manmade fibres (US$ 849 million), footwear (US$ 779 million), iron & steel (US$ 713 million), aluminium products (US$ 705 million), sugar (US$ 640 million), carpet (US$ 592 million) and also in machinery for dairy (US$ 527 million). 

Key Policy Reforms in Uttar Pradesh

  • The Uttar Pradesh Investment Summit 2018 set the stage for state Investment Friendly Environment.
  • The summit attracted investment proposals worth Rs 4.28 lakh crore. 
  • Building on this success, the Global Investor Summit in 2023 drew Rs 33.50 lakh crore in investment proposals.


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