East India faces FDI drought: Report

For those who are riding high on the recent projects announced by Wipro and Infosys in West Bengal, Nitish magic in Bihar, Naveen’s rule in Orissa and the enormous investment potential of the North-East, here comes a shocker.

According to a report – Globalization for development of Eastern India -- released by the American Chamber of Commerce in India (Amcham) and Deloitte, the Eastern and North Eastern states accounted for only 1.4 per cent of the total foreign direct investment(FDI) received by the country.

Citing statistics from department of industrial policy and promotion and ministry of commerce and industry, the report said, from April 2000 to August 2010 India saw an overall FDI investment of Rs 5425 billion. During this period, Maharashtra, National Capital Region

(NCR), Karnataka and Gujarat led the FDI inflow chart – with Rs 18,49560 million, Rs 10,99810 mn, Rs 34,8600 mn and Rs 29,4500 mn simultaneously. While West Bengal witnessed only Rs 60,500 mn, Orissa Rs 11,540 mn, Bihar Rs 20 mn and all the North Eastern states saw just Rs 2,800 mn of FDI.

“The government should improve political climate in this part of the country to attract more foreign investment. Out of 17 Indian cities in terms of investment, Kolkata stands last. It shows the need of a better policy framework. However, Orissa is far ahead of Bengal in terms of investment climate,” said Beth A Payne, US Consul-General in Kolkata, at an Amcham meet in the city last week.

The report demands better infrastructure, electricity and telecommunication facilities along with access to skilled manpower and land for the development of the region.

“The government should focus more on the manufacturing sector and we need more projects under public private partnerships for the progress of East and North East India. Along with this, agriculture also needs special consideration as majority of people here are dependent on the sector,” said Nitin Paranjape, chief executive officer and managing director of Hindustan Unilever Ltd.

Meanwhile, the cost of starting a business is comparatively lower in the Eastern Indian cities like Bhubaneswar, Patna, Guwahati and Kolkata, compared to places like Mumbai, Ahmadabad, Jaipur, New Delhi, Gurgaon and Indore. However, the time taken to start a business in these cities is higher than that of other major cities, the report said, referring to a World Bank data.

It takes 36 days to start a new business in Kolkata, while it is 38 days in Guwahati and 37 days in Patna and Bhubaneswar. “The state governments should concentrate more on education and IT sector. We have to think about non-linear models of growth for this part of the country,” said Roopen Roy, managing director, Deloitte & Touche Consulting India.

However, the political leadership seems confident about the prospects of the region. “North-East shares only 2 per cent of its border with other parts of the country.

It has tremendous potential in tourism, horticulture and power sectors. So, we have to implement not just a Look East policy but should also target on trade with Bangladesh,” said Conrad K Sangma, Nationalist Congress Party leader of Meghalaya.