Context: On a closer analysis of the recent series of big-tick=et foreign investments, fall short of actually solving the problems and seems detrimental to the business competition in India.
Critique of foreign investments:
Not much investment: As compared to the previous year’s FDI figures ($50 billion), current investments are just $27.7 billion.
Spread out investment: Google’s investment of $10 billion, is to be delivered in tranches over the next 5-7 years.
Failed promises in the past:
In 2017, only about 10% of the funds promised in the various Memoranda of Understanding (MOUs) signed materialized. In 2019, that ratio fell to less than 1%.
Taiwanese high-tech giant Foxconn had promised a $1 billion investment.
Investments providing ‘jobless’ growth:
About 99% of the said investments would be in the Information Technology (IT) and Business Process Management (BPM) sectors
The quantum of jobs added would be minuscule 0.05% of the total workforce. Last fiscal year, the IT and BPM sectors added about 200,000 new jobs.
By contrast, recent large investments in China have been much more diversified across sectors and more conducive to employment creation there.
Concentrated investments:
63% of the announced investments are in a single business, Reliance Jio’s Platform.
This reduced business competition, impacting productivity, and high-quality growth.
This might lead to crony capitalism.
No investments in manufacturing: That is where high productivity and plentiful jobs are created.
A major manufacturing hub for exports remains a pipe dream.
Substandard productivity: India’s much-touted success as the world’s largest producer of personal protective equipment (PPE) has failed to generate noteworthy export sales