According to government figures, foreign direct investment (FDI) in India increased 47.8 percent to $16.17 billion between April and June of the current fiscal year, driven by strong inflows into the services, computer, telecom, and pharmaceutical sectors. FDI inflows totaled $10.94 billion in April-June 2023-24.
Furthermore, as per the figures, overseas inflows increased to $5.85 billion in May and $5.41 billion in June, up from $2.67 billion and $3.16 billion in the same time last year. In April, FDI inflows were down somewhat at $4.91 billion, compared to $5.1 billion in April 2023.
India's Foreign Direct Investment: Key Metrics
Total FDI, which includes equity inflows, reinvested earnings, and other capital, increased by 28 percent to $22.49 billion in the first quarter of this fiscal year from $17.56 billion in April-June 2023-24, according to data from the Department for Promotion of Industry and Internal Trade (DPIIT).
During the period, significant nations such as Mauritius, Singapore, the United States, the Netherlands, the UAE, the Cayman Islands, and Cyprus increased their FDI equity inflows. However, inflows from Japan, the United Kingdom, and Germany have fallen. Inflows increased in the sectors of services, computer software, hardware, telecommunications, pharmaceuticals, and chemicals.
The report also revealed that Maharashtra received the largest influx of $8.48 billion during the first quarter of the previous fiscal year. It was trailed by Karnataka ($2.28 billion), Telangana ($1.08 billion), and Gujarat ($1.02 billion). FDI inflows to Delhi and Rajasthan fell from the previous year.
Meanwhile, Moody's Analytics reported that FDI inflows into emerging market economies such as India and China dropped in 2023. The collapse was caused by a reduction in global investment flows and supply-chain disruption, as well as rising prices and tighter financial conditions following the COVID-19 epidemic.
"China, the world's second-largest recipient of FDI, experienced a downturn in 2023." Inflows were negative in the third quarter, as withdrawals and shrinking outpaced new investments. "More recent data showed a fresh decline in the second quarter of 2024," the paper stated.
According to the research "Why FDI Is Shrinking," investment flows are being molded by economic fragmentation, trade and geopolitical conflicts, industrial policies, supply-chain diversification, and tougher restrictions to prevent the use of tax havens. "FDI into India has also seen better days, falling in recent years despite the country's push into manufacturing and notable investments from tech giants such as Apple Inc.," according to the research.
