Global uncertainties continued to cause equity inflows through the foreign direct investment (FDI) channel to drop 6% year over year to $10.8 billion in the October- December quarter.
According to the data, the FDI inflow trend that has been dropping over the past few years has not yet been stopped, nor have the levels of repatriation and disinvestment increased. The pattern suggests that increasing FDI, particularly in the nation’s manufacturing sector, may require more investor-friendly measures, such as structural adjustments to the economy.
India had aimed to reach $100 billion in FDI annually. Inflows of FDI equity were $13.6 billion in July-September and $16.1 billion in April-June. Data gathered by the Department for Promotion of Industry and Internal Trade (DPIIT) shows that inflows increased 27% to $40.6 billion from April through December.
The services industry continued to receive the largest amount of foreign direct investment (FDI) in October- December, with $1.5 billion throughout the quarter. Computer hardware came in second with $1.3 billion and $613 billion in trading. With $1.3 billion in FDI equity flows into the sector, non-conventional energy is starting to draw a lot of investors.
The United States ($1.1 billion), Mauritius ($1.6 billion), and Singapore ($4.4 billion) were the largest sources of foreign direct investment during the quarter. Fresh equity, reinvested earnings, and other capital were all part of the $62.4 billion in FDI inflows from April to December, compared to $51.5 billion over the same period in the previous fiscal year.
Gross foreign direct investment (FDI) in FY24 was approximately $71 billion, which was less than the $77 billion average for FY20–FY24. The ratios of foreign direct investment (FDI) to GDP in both the “industry and “services” sectors are generally below their pre-pandemic levels.
Additionally, analysts note that although inflows have slowed, current investors are increasingly reinvesting their profits.
