The former UK minister for investment said, addressing a session on ‘Unlocking Growth through Foreign Investment’ on Saturday, that manufacturing has a “profound” social and economic impact as it helps re-establish the social hierarchies in towns and cities.
“Extraordinarily, foreign investment has increased 20 times in India in the last 20 years and this hasn’t come about by accident and particularly since 2014,” Grimstone said. Since 2014, there have been government policies such as the impact of the ease of doing business, reforms to the tax code to make it transparent, many economic changes and “a real sea change in the welcoming attitude that India pays to foreign investors“, he said.
Emphasising that India has a “very investor friendly environment”, he said, “I really do believe that India has now become one of the most attractive destinations in the world for foreign investment. And that has enormous implications going forward.”
As per Grimstone, five states in India at the moment attract 90% of foreign direct investment. “How do we level up states that have fallen behind or weren’t so lucky to benefit from this?” he said. This situation is similar to that in the UK, where there is a huge concentration of economic activity in London, he said. “We found that foreign investment was vitally important. And we over-incentivised foreign investors to set up investments, particularly manufacturing investments, in those parts of the UK which needed levelling up,” he said.
UK businesses with foreign investments were 70% more productive than their domestic counterparts and were a huge source of productivity for the British economy as they exported more because of their links back to their home countries, tended to pay higher wages and generated much more intellectual property than their British counterparts, he said.
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