Make in India, one of the flagship initiatives launched under Prime Minister Modi, has led to a step change in FDI inflows, writes an investment facilitator. The total FDI inflows into India stood at $60.1 billion in 2016-17 - the highest ever in a single year. Compared to 2013-14, this represents a 75 per cent increase. India's achievement is even more stark when compared to falling global FDI flows as highlighted by UNCTAD. More importantly, Make in India has enabled long-term structural changes such as opening new sectors for FDI, increasing the ease of doing business, cutting the red tape and improving the physical infrastructure. Most recent commentaries of the Indian FDI scenario focus on the quantity of FDI and the regulatory or procedural aspects. Few focus on the quality of FDI that is key to India's growth story, characterised by industrialisation and urbanisation. Today, India is the greatest industrialisation and urbanisation story in the world. We aim to increase the share of the manufacturing sector in GDP from about 17 per cent to 25 per cent. We will have nearly 590 million people in cities by 2030, about twice the population of the US today. At any point in a country's growth journey, a few specific areas need disproportionate investment and access to latest technology. Now India needs investments and technologies that provide infrastructure and jobs for an urbanising India, clean energy to support industrialisation and quality healthcare for the productive workforce. Thus, to evaluate the quality of FDI, one needs to address two questions: First, is the FDI coming into sectors where it matters most In other words, is it contributing to the India growth story in themes such as industrialisation, urbanisation, social sector and environment Second, what is the role of FDI within these sectors For instance, does it provide access to new technologies, innovative practices and business models Changing sector-profile of FDI The past. Historically, services and technology accounted for more than 40 per cent of FDI. While services continue to have the highest share of FDI, in the last couple of years, many new entrants have found their place in the top-10 sectors. Recent entrants include electrical equipment, cement, trading, information & broadcasting, metals, hotels & tourism, and hospitals & diagnostics. This shows a skew in favour of manufacturing and labour-intensive services. [Figure 1] The future. For the first time in India, Invest India tracks forward-looking or leading indicators of inward FDI. Invest India, India's national investment promotion and facilitation agency, acts as the first point of contact for all investor needs. It is a key cog in the wheel as it handholds foreign investors throughout their investment lifecycle. The analysis of two key leading indicators - the pipeline of cases that Invest India facilitates and the investor interest, as seen in the from the investor queries, that Invest India answers capture the futuristic trends in FDI. Invest India currently facilitates total investments of over $70 billion, covering over 300 cases. The top five sectors in this pipeline are construction and infrastructure, automobiles, renewable energy, healthcare and retail. These sectors help create quality jobs in manufacturing or services and add to much needed physical infrastructure. In addition, the analysis of investor interest queries highlights that the top areas of interest are food processing, IT/ITeS, renewable energy, electronics, and textiles. A look at the FDI dynamics within these top sectors in Invest India's deal pipeline shows that foreign investors are bringing in newer technologies and pioneering business model innovations in India. Construction The construction sector is the fulcrum of industrialisation and urbanisation. Investors are both creating large greenfield cities and bringing in new business models and technologies. FDI is changing the face of our metros as the majority of the FDI in construction is in the vicinity of the top-10 metro cities. For instance, Korean companies are developing large scale green-field city projects in Western India and Chinese companies such as Wanda Group, CFLD and CASME are actively bidding for new large-scale industrial cities. In some cases, a Joint Development Model is being tried, in which the title resides with the Government and the investor will build the infrastructure and earn from sale proceeds. In real estate PE space, global players such as Blackstone, Brookfield, GIC and QIA are eyeing Grade-A office and retail properties. This is positive for the cash-strapped developers and provides an entry vehicle for foreign players. This will also help bundle assets for REITS. Several global companies such Vollert, Sommer, Elematic, spirol and Spancrete have established facilities to provide precast or prefab solutions. Renewable Energy India is undertaking the largest renewable energy capacity expansion programme in the world with a target of 175 GW of renewable power by 2022. India's Intended Nationally Determined Contribution (INDC) is to reduce the emissions intensity of GDP by a third by 2030, below 2005 levels. Global renewable majors such as Vestas from Denmark, SANY from China and Gamesa from Spain are setting up or already manufacturing wind turbines and its components. We see an emerging trend that foreign investors are collaborating with Indian players on next-gen technologies such as fuel cell, solar module cleaning robots, preventive maintenance of grid and auto tilt technology for solar modules. Healthcare Large foreign investors such as NMC Health and IUIH are looking to create integrated medi-cities, which will drive significant economies of scale and exploit synergies with diagnostic clinics and medical equipment players. These will cater to the domestic need and at the same time serve as global medical tourism hubs. Invest India is collaborating actively with the investors and the state governments to create pan India network of integrated medi-cities. State government's proactive interest to negotiate and provide land at subsidized rates or in a PPP model is a win-win proposition as it bridges the huge demand- supply mismatch in healthcare in the state and makes the business model of investors commercially viable.

Retail Retail accounts for over 8 per cent of the employment in India. Investors in single brand retail such as H&M, Zara, Mango, Levi's etc., are increasing the share of their local sourcing and helping India integrate with global value chains. At the same time, they are bringing in global best practices in both the front-end and back-end operations in India. While the eye-popping valuations in e-commerce always grab headlines, the role foreign capital plays in the economy is often under-analysed. The e-commerce platforms, aided by the capital infusion, are penetrating tier-2 and tier-3 towns. Not only so they seek market and expand their merchant base but also bring thousands of agriculture or allied sector labour into the formal system. As many as 60,000 handicraft sellers and Indian small and medium enterprises (SMEs) have been brought on to the portals of e-commerce giants in the past few months. It is widely known that FDI supplies the much-needed capital for India's growth story. It is encouraging to see its role expand. FDI is significantly augmenting the quality of growth by bringing in capital in sectors that are key at this stage of India's growth story, with latest technologies and business models that are best suited for India. Shankar Ranganathan is Assistant Vice President at Invest India. He heads the Strategic Investment Research Unit of Invest India, which focuses on FDI and related topics.