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Ministry Of Finance Forecasts Rise In FDI Inflow For Domestic Manufacturing Sector

India’s domestic manufacturing sector is poised to receive substantial external backing in the coming months, with investments expected to rise significantly. As per the Ministry of Finance’s monthly economic review, a growing number of entities in the US and Europe are prioritizing reindustrialization efforts. Their focus on bolstering supply chain resilience, particularly through strategies like […]

India’s domestic manufacturing sector is poised to receive substantial external backing in the coming months, with investments expected to rise significantly. As per the Ministry of Finance’s monthly economic review, a growing number of entities in the US and Europe are prioritizing reindustrialization efforts.

Their focus on bolstering supply chain resilience, particularly through strategies like the China Plus One approach, could prove highly advantageous for Indian manufacturing enterprises.

The review underscores that Western economies are diversifying their supply chains to reduce reliance on China, with India emerging as a key destination for such diversification. Improved economic activity and positive consumer sentiment in Europe, coupled with a stable US economy, have contributed to an uptick in India’s exports in April, as per Ministry of Commerce data.

Both the industrial and service sectors of India’s economy are performing well, driven by robust domestic demand and tentative external demand. This positive trajectory is expected to continue as global economic conditions improve. The EXIM Bank of India has projected double-digit growth in merchandise exports for the first quarter of FY25, signaling strong prospects for India’s manufacturing sector.

India witnessed record exports of USD 778 billion during FY23-24, according to the Commerce Ministry. The smartphone market also experienced significant growth, shipping 34 million units in Q1 2024 with an 11.5% YoY increase. Defence exports reached a record Rs 21,083 crore in FY 2023-24, marking a 32.5% growth over the previous fiscal.

Parliamentary data reveals total foreign investments in the manufacturing sector from October 2019 to December 2023 were USD 20.8 billion, with Maharashtra, Karnataka, Gujarat, Delhi, and Tamil Nadu receiving the most significant shares. Finance Minister Nirmala Sitharaman has emphasized the need for a stronger focus on manufacturing, highlighting its crucial role in global value chains and the necessity for supportive policies to enhance India’s manufacturing capabilities.

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Domestic Manufacturing SectorMinistry of FinanceRise In FDI InflowTDGThe Daily Guardian