Madhya Pradesh govt optimistic despite RBI data showing decline in inflow of FDI

The foreign direct investment (FDI) inflow to Madhya Pradesh has shown a steady decline over the past three years even as foreign investment in the neighbouring Rajasthan and Gujarat has picked up.

According to a data released by the Reserve Bank of India, as against a FDI of Rs 1,208 crore (US $220 million) in 2012-13 and `708 crore (US $119 million) in 2013-14, the state attracted just `601 crore (US $100 million) foreign investment in 2014-15.

The state government has blamed economic slowdown and other commercial factors behind the slump, but expressed optimism about the future.

“Foreign investment depends on a number of factors and we have big projects in the pipeline…The state government has come out with a policy for defence sector and we are confident that it would attract foreign companies in future,” a state industry department official said. Industry experts, however, are skeptical.

“Foreign investors look at multiple factors, including world-class infrastructure and logistics. The Special Economic Zones (SEZs) have failed to take off in the state and this is one indication that Madhya Pradesh is not a very attractive destination except for companies in the pharmaceutical sector,” Dewas Industry Association president Ashok Khandelia said.

A recent study by the Associated Chambers of Commerce of India has also pointed out that poor implementation of MoUs signed by investors in Madhya Pradesh over the past few years has resulted in huge escalation of costs.

“There is a problem of availability of raw material, land and clearances and so investors, especially the foreign investors, are not getting the right environment for investment,” Assocham secretary general DS Rawat said.