FDI Inflow To India Down To 16% In FY23, First Decline In A Decade (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.

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.

Why FDI Inflows declined? Experts say that the proximate reason is that big-ticket mergers and acquisitions (M&As) which attracted FDI flows in recent years were not repeated. One major reason for declining FDI across the world was the Covid-19 pandemic that had stopped many projects and investments.

Since 1991 FDI inflows in India has increased approximately by more than 165 times. Keywords: economic development, economic reform, FDI, foreign capital, liberalization. FDI play multidimensional role in the overall development of the host country.

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.

New Delhi: Inflows of foreign direct investment (FDI) into India dipped for the first time in a decade, falling 16% to $71 billion (on a gross basis) during the financial year 2022-23 because of high inflation and weak demand in the US and Europe, according to the Times of India.

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.

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.

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.

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.

What is the current FDI outflow in India? ›

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.

FDI in service sector was increased to 46% in 2014–15. It is US $1.88 billion in 2017. Service sector includes banking, insurance, outsourcing, research & development, courier and technology testing. FDI limit in insurance sector was raised from 26% to 49% in 2014.

Foreign direct investment (FDI) in India was introduced in the 1991 under the Foreign Exchange Management Act (FEMA) implemented by the then finance minister, Dr. Manmohan Singh. It commenced with the baseline of 1 billion dollars in 1990.

India's FDI Up From $45.15 Bn In 2014-2015 To $84.84 Bn In 2021-22.

Again the actual inflows of FDI gradually increased from US $ 154,5 million (Rs. 351.4 crore) in 1991 to US $ 573.8 million (Rs. 1786.0 crore) in 1993 and then to US $ 2383 million (Rs.

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.

In 2011-12, FDI rose 34.4 per cent to $46.84 billion, compared with $34.84 billion in 2010-11 and $37.74 billion in 2009-10, according to data from the Department of Industrial Policy and Promotion.

FDI was found significantly correlated with both the markets with the coefficient of correlation being 0.666 and 0.682 respectively. It was further found that FDI has affected BSE SENSEX up to 44 percent and CNX Nifty up to 47 percent.

FDI net inflows are the value of inward direct investment made by non-resident investors in the reporting economy. FDI net outflows are the value of outward direct investment made by the residents of the reporting economy to external economies.

Is FDI growing in India? ›

The World Investment Report 2022 of UNCTAD places India as the seventh largest recipient of FDI in the top 20 host countries in 2021. India received the highest-ever FDI inflows of US$ 84.8 billion including US$ 7.1 billion FDI equity inflows in the services sector in FY22.

FDI provides India with stability in inflows of funds, access to international markets, export growth, technological transfer, and skills to improve the balance of payment. But FDI doesn't guarantee a high growth rate.

The U.S. has the largest consumer market in the world, with a GDP of $20 trillion and 325 million people. 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.

Top investor countries in India in FY 2023. 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).

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%).

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.

FDI in Figures April 2023

Nevertheless, the United States and China were the top two FDI destinations worldwide in 2022, followed by Brazil, receiving peak level of inflows partly due to increased reinvestment of earnings.

Negative FDI positions largely result when the loans from the affiliate to its parent exceed the loans and equity capital given by the parent to the affiliate. This is most likely to occur when FDI statistics are presented by partner country.

What are the effects of corruption on FDI inflows? ›

The findings showed that countries with a low level of corruption experienced high FDI inflows. However, there is an exception for BRIC countries as they ascertained that these countries with a high level of corruption still experienced high FDI inflows.

Foreign direct investment (FDI) is a category of cross-border investment in which an investor resident in one economy establishes a lasting interest in and a significant degree of influence over an enterprise resident in another economy.

Percent of world Foreign Direct Investment

The average value for India during that period was 1.36 percent with a minimum of 0.18 percent in 1999 and a maximum of 5.43 percent in 2020. The latest value from 2020 is 5.43 percent. For comparison, the world average in 2020 based on 186 countries is 0.54 percent.

4 (i) An FII may invest in the capital of an Indian company either under the FDI Scheme/Policy or the Portfolio Investment Scheme. 10% individual limit and 24% aggregate limit for FII investment would still be applicable even when FIIs invest under the FDI scheme/policy.

The GOI approved 100 percent FDI in single-brand retail in January 2012 and relaxed certain provisions in a separate September 14, 2012 announcement. Chiefly, foreign investors need not be the owner of the retail brand and companies can source products from any Indian supplier.

1 RISING FDI IN INDIA

FDI inflow from April 2014 to March 2020 (USD 357.35 Bn) is 52.5% of the overall FDI received in the country since April 2000 (USD 680.91 Bn). For the first time, India has crossed the USD 70 Bn mark in FY 2019-20 and recorded total FDI inflow of USD 73.45 Bn.

FDI inflow in India stood at US$ 45.15 billion in 2014-2015 and has increased since then.

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

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 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.

How much is FDI inflow in India yearly? ›

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.

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%).

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.

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.