Exploring IR4.0 Strategy in Post COVID-19 Era Through Insights from FDI Inflows

Abstract

Published research on Industrial Revolution 4.0 (IR4.0) is centered around conceptualization and public policy announcements, staying largely esoteric and under-explored. However, with COVID-19 Lockdowns creating an economic crisis out of a health crisis, particularly in countries such as India and USA, it is likely that the vision of IR4.0 will influence new initiatives and collaborative efforts in a post-COVID-19 world realigning to the new normal. India will put its IR4.0 strategy on fast-track to play a meaningful role in the global supply chain. This paper seeks to extend the research literature by studying the possibility of IR4.0 business opportunities for India by looking at trends in FDI in-flows for the period 2013-14 to 2018-19 and by analyzing the financial management of FDI companies. The paper aims to close the research gap by describing and explaining the industries and countries that are best-fit for India’s IR4.0 ambitions. To achieve this objective, a general linear model with repeated measures is applied to a panel data consisting of yearly count of FDI companies reporting to RBI for the period 2013-14 to 2018-19 across nine industry verticals and from 10 investor countries. The study found that though some industry verticals attract FDI, India is not a manufacturing destination, FDI inflows are fickle and most investor countries do not have a strategic buy-in with India through FDI commitments. The main conclusion is that IR4.0 strategy for India can be based on software development for industrial Internet of Things, Human-Machine interface and robotics software. Also, improving Indian business environment and practices in India should be a part of the post COVID-19 strategy.