Economic Survey 2023: FDI inflows expected to rebound in India (2024)

FAQs

What is the FDI inflow In India 2023? ›

In FY 2023, India received equity inflows worth US$46.03 billion. The total FDI inflows received in FY 2023, which includes equity inflows, reinvested earnings, and other capital sources, amounted to US$70.97 billion – a decrease from the US$84.83 billion recorded during FY 2022.

In FY 2023, Singapore accounted for maximum inward FDI in India at US$17.20 billion, followed by Mauritius (US$6.13 billion), the US (US$6.04 billion), UAE (US$3.35 billion), and the Netherlands (US$2.49 billion).

The United States takes the top ranking for the 11th consecutive year. Canada reclaims the second position after falling to third in 2022, and Japan jumps to third from last year's fourth-place ranking.

FDI in Figures April 2023

Global FDI flows dropped by 24% in 2022, to USD 1 286 billion, after large withdrawals of capital by a telecommunication MNE operating in Luxembourg. Excluding Luxembourg, global FDI flows declined by 5% in 2022 compared to the previous year.

Despite the ongoing pandemic and global developments, India received the highest annual FDI inflows of USD 84,835 million in FY 21-22 overtaking last year's FDI by USD 2.87 billion. Earlier, FDI inflows increased from USD 74,391 million in FY 19-20 to USD 81,973 million in FY 20-21.

India shall see FDI increase once the market is again ready to invest in growth stage companies." In comparison to inflows in 2021–2022, the yearly reduction equals 16.3% in 2022–2023. Gross FDI inflows increased by 10% from fiscal 2019–20 to USD 81.97 billion in 2021–22.

Top 5 sectors receiving highest FDI Equity Inflow during FY 2022-23 are Services Sector (Fin., Banking, Insurance, Non Fin/ Business, Outsourcing, R&D, Courier, Tech. Testing and Analysis, Other) (16%), Computer Software & Hardware (15%), Trading (6%), Telecommunications (6%) and Automobile Industry (5%).

According to the Department for Promotion of Industry and Internal Trade (DPIIT), India's cumulative FDI inflow stood at US$ 871.01 billion between April 2000-June 2022; this was mainly due to the government's efforts to improve the ease of doing business and relax FDI norms.

France remains Europe's leading destination for FDI, showing growth of 3% last year, with the UK placing second and Germany in third place.

How much FDI is allowed in India? ›

Percent of world Foreign Direct Investment, 2020 - Country rankings: The average for 2020 based on 186 countries was 0.54 percent. The highest value was in China: 21.36 percent and the lowest value was in Switzerland: -21.72 percent. The indicator is available from 1993 to 2020.

Free-trade agreements with 20 other countries provide access to hundreds of millions of additional consumers. A strong and robust consumer market is a key reason the U.S. ranks top in the world for FDI. The U.S. hosts the most developed, flexible and efficient financial markets in the world.

According to BEA, FDI in the United States is defined as the ownership or control, directly or indirectly, by one foreign person, or entity, of 10 percent or more of the voting securities of an incorporated U.S. business enterprise or an equivalent interest in an unincorporated U.S. business enterprise.

Economic Survey 2023: India received the highest-ever FDI inflows of $ 84.8 bn in services in FY22. Economic survey by CEA V Anantha Nageswaran was tabled in the parliament on Tuesday by finance minister Nirmala Sitharaman, a day before she presents the budget for the next fiscal year.

Some of the major impediments for India's poor performance in the area of FDI are: political instability, poor infrastructure, confusing tax and tariff policies, Draconian labor laws, well entrenched corruption and governmental regulations.

The combined tally of investment of three years makes Maharashtra the most attractive investment destination, states the survey. The investment is more than Karnataka ( ₹2,93,149 crore, 331 projects) and Gujarat ( ₹ 2,36,866 crore, 602 projects), states the survey.

New Delhi: Gross foreign direct investment (FDI) flows, for the first time in a decade, declined on an annual basis in 2022-23 to USD 71 billion mainly due to a slowdown in the global economy, according to the RBI data. The annual decline works out to be 16.3 per cent in 2022-23 compared to inflows in 2021-22.

After a hiatus in 2022, India has rejoined Kearney's foreign direct investment (FDI) confidence index list in the 16th position, signalling a renewed interest from foreign investors in the Indian markets.

Why foreign investment is low in India? ›

Some of the main factors which tend to act as roadblock for foreign investment in India include political considerations, poor infrastructure, inadequate government policies, rigid labour laws and rampant corruption.

During the last decade, the services sector has attracted the highest FDI inflows of all sectors.

FDI involves a long-term commitment to establish a business interest in the foreign country, while FPI is a short-term investment that aims to diversify investment portfolios and participate in the growth of foreign economies.

Many studies show that China is one of the most important countries for FDI inflow due to its improved infrastructure [7], continuously open market [8] , strengthened property rights protection [9,10], rapid expansion of economic scale, and competitive cost advantage [11].

Mauritius, Singapore, the U.S., the Netherlands, Japan, the U.K., Germany, and the United Arab Emirates are the main investing countries in India. Investments were mainly oriented towards services, computer software and hardware, telecommunications, trade, the automobile industry, construction, and chemicals.

The main investing countries in the U.S. are Japan, Germany, Canada, the United Kingdom, Ireland and France. Most of these investments are in manufacturing, financial and insurance activities, and trade and maintenance. In 2021, California received the most investment, followed by Massachusetts and New York (BEA).

The country is ranking 50th amongst 82 countries reviewed in the latest Economist Intelligence Unit business environment rankings for 2022-26.

In the region, Vietnam and Indonesia have attracted the largest FDI inflows into the green sector over the past decade ($232-242 billion), followed by Malaysia and Singapore ($153-164 billion). Governments in Southeast Asia devote much of their resources to attracting FDI in the hope of creating jobs.

The United States is the top destination of inward foreign direct investment. Source: IMF Data, Coordinated Direct Investment Survey. Note: Chart shows inward FDI positions.

By U.S. state, California received the most investment, totaling $64.1 billion, followed by Massachusetts ($53.8 billion) and New York ($34.2 billion). Greenfield investment expenditures—expenditures to either establish a new U.S. business or to expand an existing foreign-owned U.S. business—were $3.4 billion in 2021.

Which sectors are banned In India for FDI? ›

The present policy prohibits Foreign Direct Investments (FDI) in the following sectors: Gambling and Betting; Lottery business (including government/ private lottery, online lotteries etc); Activities /sectors which are not open to private sector investment (eg, atomic energy /railways);

FDI IN DEFENCE SECTOR

2020, has liberalised and allowed FDI under automatic route up to 74% and up to 100% through Government route wherever it is likely to result in access to modern technology. Since the notification of revised FDI policy, the total FDI inflow reported till May, 2022 is approximately Rs. 494 Crores.

FDI outflows originating in India have risen from $2 billion in 2004 to $15 billion in 2021, constituting around 1 per cent of the global outflows.

Historically, the United Kingdom had been the largest cumulative overseas investor in the United States. But because of weak FDIUS flows in 2019 and divestments in 2020, Britain dropped in ranking to fourth place, behind Japan, Germany, and Canada, respectively.

Highlights: Foreign Investment US Real Estate Statistics

From April 2020 to March 2021, investors from outside the United States bought 107,000 properties worth $54.4 billion in the United States. Foreign-born individuals make up 14.25 percent of the population in the country's 50 largest metros, on average.

Disadvantages of FDI

hinder domestic investments and transfer control of domestic firms to foreign ones. risk political changes, exposing countries to foreign political influence. influence exchange rates. Influence interest rates.

Local Chinese Market and Business Climate

The sheer size of China's population makes it an attractive nation for investors to commit capital to higher-end industries like healthcare, information technology, engineering, and luxury goods.

United States Foreign Direct Investment (FDI) registered a growth equal to 0.6 % of the country's Nominal GDP in Dec 2022, compared with a growth equal to 1.8 % in the previous quarter. US Foreign Direct Investment: % of Nominal GDP data is updated quarterly, available from Mar 1960 to Dec 2022.

Is FDI affected by Covid? ›

In addition, another macroeconomic variable FDI has also been adversely impacted by the pandemic as well. In 2020, global FDI flows dropped by one in three to $1 trillion which is the lowest point after the global financial crisis.

U.S. companies spent about $11 billion in 2022 buying or investing in Chinese companies, according to the data service firm Dealogic.

Foreign direct investments are commonly categorized as horizontal, vertical, or conglomerate. With a horizontal FDI, a company establishes the same type of business operation in a foreign country as it operates in its home country.

India foreign direct investment for 2021 was $44.73B, a 30.51% decline from 2020. India foreign direct investment for 2020 was $64.36B, a 27.17% increase from 2019. India foreign direct investment for 2019 was $50.61B, a 20.17% increase from 2018.

FDI outflows originating in India have risen from $2 billion in 2004 to $15 billion in 2021, constituting around 1 per cent of the global outflows.

According to the Department for Promotion of Industry and Internal Trade (DPIIT), India's cumulative FDI inflow stood at US$ 871.01 billion between April 2000-June 2022; this was mainly due to the government's efforts to improve the ease of doing business and relax FDI norms.

Singapore is ranked one FDI provider to India. The small island nation has invested $15.9 billion in FY22 which is accounted for 27 per cent of India's total FDI received. USA is India's second biggest investor with FDI of $10.5 billion, with 18 per cent of total FDI.

India Foreign Direct Investment (FDI) registered a growth equal to 0.9 % of the country's Nominal GDP in Dec 2022, compared with a growth equal to 1.1 % in the previous quarter. India Foreign Direct Investment: % of Nominal GDP data is updated quarterly, available from Jun 2004 to Dec 2022.

Top 5 sectors receiving highest FDI Equity Inflow during FY 2022-23 are Services Sector (Fin., Banking, Insurance, Non Fin/ Business, Outsourcing, R&D, Courier, Tech. Testing and Analysis, Other) (16%), Computer Software & Hardware (15%), Trading (6%), Telecommunications (6%) and Automobile Industry (5%).

Detailed Solution. The correct answer is Services Sector. For economic growth, Foreign Direct Investment (FDI) has been a major non-debt financial resource for the economic development of India.

Which country is top in FDI outflow? ›

In 2021, the United States had the largest outward Foreign Direct Investment (FDI) stock worldwide, amounting to approximately 9.8 trillion U.S. dollars. China was second by a wide margin with around 2.58 trillion U.S. dollars.

The combined tally of investment of three years makes Maharashtra the most attractive investment destination, states the survey.

New Delhi: Gross foreign direct investment (FDI) flows, for the first time in a decade, declined on an annual basis in 2022-23 to USD 71 billion mainly due to a slowdown in the global economy, according to the RBI data. The annual decline works out to be 16.3 per cent in 2022-23 compared to inflows in 2021-22.

During the first half of this fiscal, Singapore emerged as the top investor. It was followed by Mauritius, the U.A.E., the U.S.A., the Netherlands and Japan.

Often referred to as the 'Big Bull', Rakesh Jhunjhunwala was one of the most popular and successful investors in the Indian stock market. Before entering the financial markets, Rakesh Jhunjhunwala qualified as a Chartered Accountant.