₹7,553-crore FDI in 4 yrs: Punjab at 12th spot, but behind Haryana

Chandigarh : Punjab has received a cumulative foreign direct investment (FDI) of ₹7,552.89 crore (US $ 1,013.60 million) in the last four years.

The state is at the 12th place in the country in attracting FDI and accounts for 0.5% of the inflows of ₹15.08 lakh crore from October 2019 to June 2023, according to the latest foreign direct investment equity data released by the Union ministry of commerce and industry’s department for promotion of industry and internal trade (DPIIT).

During this period, Punjab’s best ranking was 9th in 2020-21 when it attracted the FDI equity investment of ₹4,719.45 crore --- the highest in four years, but the numbers have been dipping since. The state has started well this year and received equity inflows of ₹425 crore in the first quarter (April-June) of the current fiscal. The FDI inflows into Punjab have been primarily in food processing, auto components, engineering goods and textile units in the past four years, a state official said.

The total foreign direct investment includes equity inflow, equity capital of unincorporated bodies, reinvested earnings and other capital, but the central government maintains the state-wise details for only equity component of the FDI inflow which too was started from October 2019.

The FDI data was earlier collected on the basis of regional office of the Reserve Bank of India (RBI) in which Punjab was clubbed with Haryana, Himachal Pradesh and Chandigarh.

In comparison, neighbouring Haryana has done far better with FDI equity inflows of ₹63,528 crore (approximately US $ 8,316 million), which is 4.17% of the total inflows between 2019 and 2023. The state is at number six in attracting foreign direct investment in the country. Himachal Pradesh has received ₹1,896 crore during the same period. Maharashtra, Karnataka and Gujarat are the top states, commanding the lion’s share of 68% of the FDI inflows into the country.

Frequent protests, connectivity issues

Industry watchers say successive governments in Punjab have been making efforts to attract investments, particularly from foreign investors, but connectivity and protests are major deterrents. “The existing industry in Punjab has also been complaining to the state government about disruption in their operations and movements due to frequent protests and dharnas (sit-ins) on roads and rail tracks. This does not go well with investors. Also, Haryana and Punjab cannot be compared as the former has a huge advantage due to its proximity to Delhi and far superior air, road and rail connectivity,” one of them said, requesting anonymity.

In December last year, chief minister Bhagwant Mann had given an assurance to business leaders of the state that steps would be taken to ensure that protests are held in designated areas.

Reforms in ease of doing business

An industries department official said the state has come out with an attractive industrial and investment policy, carried out major reforms in ease of doing business (EoDB) and significantly improved its performance in export preparedness index.

Punjab was among top seven best performers along with Haryana, Andhra Pradesh, Gujarat, Karnataka, Telangana and Tamil Nadu in the EoDB in the Business Reforms Action Plan report released last year. “These will start delivering results sooner than later,” he said.