India’s manufacturing sector will need a massive investment of $135 billion over the next five years if it is to support economic growth of more than 8 percent, the commerce and industry minister told Reuters on Wednesday.
A government-appointed panel had projected that India required $1.5 trillion- including $72 billion in foreign direct investment (FDI) - of investment in all sectors over a similar period, Reuters reported.
“Foreign direct investment, apart from bringing in capital, also brings with it modern technology and business practices and helps in increasing the competitiveness of domestic industry,” Kamal Nath said in a written reply to parliament.
Apart from allowing FDI up to 100 percent in most industries, the government has initiated a slew of measures to boost manufacturing, such as improving infrastructure and developing growth centers.
“Also, proposals for setting up of petroleum, chemicals, petrochemicals investment regions, and manufacturing investment regions are at a conceptual stage,” Nath said.
India’s manufacturing sector expanded by 9.1 percent in the 2005/06 fiscal year, compared with 9.2 percent in the previous year. In the April-May period, it grew by 10.9 percent.
India has set a target of 12 percent growth in manufacturing as it seeks to boost GDP growth to 10 percent in the coming years, from 8.4 percent in 2005/06.