FDI Inflows to Timber Products

Abstract:

Foreign Direct Investments (FDI) have been allowed in timber products in India to meet the growing demand for furniture and other timber products. Significant initiatives have been taken to increase FDI inflows to timber products in India.

The timber product manufacturing industry is one of the oldest industries in India. Although traditionally a rural industry in India, in recent years, manufacturing of timber products have spread widely in urban areas too. The opening up of the Indian economy during the early 1990s saw a huge increase in the business activities across all major industries of India.

This propelled the growth in infrastructure in India, which further initiated the growth and use of timber products in India. The main use of timber in India is seen in the manufacture of furniture, both for commercial and domestic purposes. The government of India has allowed foreign direct investment in the timber products, especially to meet the huge demand of commercial or office furniture and allied products in India.

Scope of FDI in timber products in India:
The quantum of inflow of foreign direct investment in the Indian timber products during the period from August 1991 to March 2004 was Rs 163.21 million. The percentage of foreign direct investment in the Indian timber products against the total foreign direct investment during the aforesaid period was 0.01%. The FDI in Timber products industry of India have facilitated in setting up of new units in India. A modular furniture unit and wooden furniture and allied wooden components is going to come up in Raigad district of west Indian state of Maharashtra. Another modular furniture unit is going to come up in collaboration with Netherlands. Further, another unit for the production of timber products is planned at Tellichery.

Some of the important factors that are conductive to the inflow of Foreign Direct Investment in timber products in India are -

• Procurement of high quality timber wood seeds.
• Procurement of machineries and tools, to compliment modern plantation method.
• Cheap labor cost.
• Large area still untapped for cultivation of timber wood.
• Abundance of natural resources.
• Tropical climate - facilitates faster growth of plants.
• Huge scope in the domestic market.

Last Updated on 4/23/2011