North Indian State of Uttar Pradesh Releases FDI Policy, 2023: Key Provisions
Following a successful investment conclave in February and seeking to perform better on FDI metrics, the state of Uttar Pradesh (UP) recently announced its 2023 investment promotion policy targeting Fortune 500 companies. UP is competing with major industrial Indian states like Tamil Nadu, Gujarat, Karnataka, and Maharashtra to attract high-value investments from sector-leading companies, establish R&D and frontier innovation projects, and build up local manufacturing and sourcing ecosystems.
On October 31, the Uttar Pradesh Cabinet approved a new foreign direct investment policy aimed at offering incentives to international investors. The 2023 FDI policy includes exemptions in areas such as land acquisition, stamp duty, and capital investment.
Japanese company Fuji Silvertech, a leading manufacturer of precast concrete products, could be the first beneficiary under the new 2023 FDI Policy, with a planned investment of more than INR 1 billion. Fuji Silvertech has been allotted 20 acres of land in Sector-32 of the YEIDA area, at 75 percent subsidized rates, to set up manufacturing facilities. The location is near the upcoming Noida International Airport (Jewar). Another Fortune 500 company that is expected to receive subsidized land is Sify Infinite Spaces for the development of data centers in Sector-28.
Key investment goals for the state
State Parliamentary Affairs Minister Suresh Khanna said the decision to launch a new FDI policy was taken following low foreign investment coming into UP in recent years: just INR 94.35 billion (about US$1.13 billion) or 0.7 percent of FDI inflows into India between October 2019 to December 2022.
The government of Uttar Pradesh has an ambition to raise the state’s domestic gross product (GSDP) to US$1 trillion. This target entails a substantial increase in the manufacturing sector’s contribution to the domestic gross product, from approximately 25 percent to 50 percent.
Achieving this industrial transformation necessitates substantial investment from prominent foreign corporations and even foreign governments. Such investments will create vital value chains and supply chain clusters in the state, besides generating employment opportunities.
Uttar Pradesh is also working on making it easier to secure bank funds for projects to improve the private corporate investment outlook in the state. In terms of GSDP, Uttar Pradesh state is India’s second largest contributor.
Uttar Pradesh state ranks 11th out of the Indian states in attracting FDI; only 14 Fortune-500 companies are established here, as compared to 75 in Tamil Nadu, which has concerned local officials. The top five Indian states receiving FDI in 2022-23 were Maharashtra (29%), Karnataka (24%), Gujarat (17%), Delhi (13%), and Tamil Nadu (5%).
Given that the UP Global Investor’s Summit 2023 attracted investment proposals totaling around INR 35 trillion (US$420.43 billion), state officials are keen to see those deals come through.
Dedicated policy to incentivize FDI, Fortune Global 500, and Fortune India 500 companies investing in UP: Key provisions
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