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India Ratings and Research (Ind-Ra) in its latest report has said that despite the government's high-octane push to boost manufacturing through the 'Make in India' initiative, foreign investors continue to chase bets in the services sector. It said this could be because doing business in the services sector is less complicated than doing business in the manufacturing sector in India. It also said a bulk of the foreign direct investment (FDI) in manufacturing is not greenfield or fresh investments which should otherwise be the aspirational aspect.

The agency said FDI increased to $153.01 billion in the services sector during April 2014 to March 2022 from $80.51 billion during to April 2000 to March 2014, while the increase in manufacturing was less fast at $94.32 billion as against $77.11 billion. It reminded that in 2014, India launched a flagship programme called 'Make in India' to facilitate investments across sectors, but with a special focus to build a world-class manufacturing sector and followed it up with the PLI scheme across 14 manufacturing sectors.

Ind-Ra stated that the services sector accounted for the highest share in FDI between 2000-2014 as well, adding that within services, trading, telecommunications, banking/insurance, IT/business outsourcing and hotels/tourism are the favourites. In manufacturing, the FDI has been concentrated in segments such as auto, chemicals, drugs and pharmaceuticals, metallurgical and food processing. It also said the country has done well among emerging market economies in terms of attracting FDI, with its share increasing to 6.65 per cent in 2020 and declining due to COVID impact to 2.83 per cent in 2021. From a region perspective, it noted FDI is highly clustered around few states, hinting that the foreign fund flows may not be helping the cause of broad based development across the country.