Concerned over the decline in foreign direct investment and slowdown in manufacturing sector growth, Commerce and Industry Minister Anand Sharma has called a meeting with industry chambers on Wednesday to review the bottlenecks.
Mr. Sharma, who was given the additional responsibility of the textiles portfolio in a Cabinet reshuffle on Tuesday, will meet leaders from FICCI on Wednesday and the CII on July 14, an official said.
“Issues relating to FDI inflows, manufacturing and other industry concerns will be discussed in the meeting,” he said.
Foreign direct investment (FDI) flows into India declined by 25 per cent to $ 19.42 billion in 2010-11 from $ 25.83 billion in 2009-10. In 2008-09, the country attracted FDI worth $ 27.33 billion.
India is the only major country in South Asia where FDI inflows fell during 2010.
The country’s industrial production, too, fell to 5.6 per cent in May this year from 8.5 per cent in the same month last year, mainly on account of the poor performance of the manufacturing sector.
The rising cost of borrowings amid high global commodity prices has started hitting the industry. The 1.62 per cent growth in car sales recorded in June was the slowest in 27 months. The Reserve Bank has effected an increase of 250 basis points in the benchmark interest rates since March, 2010.
The manufacturing sector, which accounts for over 75 per cent of the total weight of the Index of Industrial Production (IIP), grew by just 5.6 per cent in May, 2011, as against 8.9 per cent in the same month of 2010.
Factory output in April, as measured by the IIP, has also been revised downward to 5.7 per cent from the earlier estimate of 6.3 per cent, as per the new series with a base year of 2004-05.
Industrial growth in April-May this year averaged 5.7 per cent, compared to 10.8 per cent in the same period last year.