Around 90% Of FDI Equity Money Flowed Into Nine Urbanised Districts Of India: Study

Nearly 90% of the foreign direct investment equity flow into the country is found to be concentrated in nine highly urbanised districts, according to a study.

The nine districts are as follows: Mumbai, Pune, Gurgaon, New Delhi, Hyderabad, Bengaluru (Urban), Chennai, Kanchipuram and Ahmedabad.

The study was done by Akara Research and Technologies, a data science-driven, geo-visual (map) analytics firm.

"While FDI equity inflows are witnessing all-time yearly highs, a deeper dive in the data indicates about 90% of the FDI concentrated in nine highly urbanised districts, more so around the urban agglomerations," said Rohit Sabherwal, a director of Akara.

The study terms these nine districts 'FDI Magnets' and most of them are concentrated in west and south India.

The study is based on FDI data for 11 quarters—beginning from the first quarter of 2020-21—released by the Department for Promotion of Industry and Internal Trade, a central government organisation under the Ministry of Commerce and Industry. The study covers 738 districts.

Significantly, these nine districts are found to be consistent performers in terms of attracting FDI. They have managed to attract over Rs 500 crore FDI in nine out of the 11 quarters, for which DPIIT data is available.

The Akara study also found four districts, which have managed to attract between Rs 100 crore and Rs 500 crore FDI during the span of the study. These four districts—which Akara terms 'Mini FDI Magnets'—are as follows: Rangareddy, Gautham Buddha Nagar, Thane and Tiruvallur.

A deep dive into the FDI data also reveals that 75% districts across the country had no FDI flow. Again, 91 out of the 112 'Aspirational Districts' got no FDI at all. The bright spots among the 'Aspirational Districts' are as follows: Jaisalmer, Ranchi, Visakhapatnam and Virudhunagar.

"Though not consistently, these four aspirational districts received sizable FDI in a couple of quarters during the period under analysis," the study said.

In terms of attracting FDI, east and north-east India have proved laggards. "The FDI flows are largely concentrated in highly urbanised districts. Metros and large towns draw the maximum FDI," the report said.

Significantly enough, two districts from Tamil Nadu—Chennai and Kanchipuram (which is traditionally known for silk saris)—figure in the top FDI list. Many iconic names such as glassmaker Saint-Gobain and car producer Hyundai dot the Chennai-Kanchipuram stretch on the national highway, which has become an industrial corridor of a unique kind in Tamil Nadu.

The dissection of the FDI data is a revelation. It indicates the inequity in the geographical growth model. Policy and fiscal planners at the state level should ponder and take note. A distributed development is what a country of the size of India requires. It calls for the development of an ecosystem that facilitates dispersal of the industrial/business activities across geographies so as to usher in equitable growth.