FDI Equity Inflows Decline 24% To USD 20.48 Billion In Apr-Sep 2023

Utkarsh Classes Last Updated 29-02-2024

FDI Equity Inflows Decline 24% To USD 20.48 Billion In Apr-Sep 2023

Economy 4 min read

Foreign direct investment (FDI) equity inflow in the country has declined by 24 percent to $ 20.48 billion in the first six months (April-September) of the current financial year 2023-24.

This decline is mainly due to decline in FDI due to lower inflows into computer hardware and software, telecommunications, automobile and pharmaceutical sectors.
According to government data, foreign direct investment inflow during the first six months of the last financial year i.e. April-September was $26.91 billion.
From January to March this year, FDI witnessed a 40.55% drop, amounting to $9.28 billion. Whereas during April-June last year it had declined by 34 percent to $10.94 billion.
Department for Promotion of Industry and Internal Trade (DPIIT) data reveals a decline in foreign investment during the months of April, May, June, July, and August. Nevertheless, it surged to $4.08 billion in September, compared to $2.97 billion in the corresponding month last year.
FDI has seen a 15.5% decrease, totaling $32.9 billion, compared to $38.94 billion in April-June 2022.
Total FDI comprises equity inflows, reinvested income, and other forms of capital.

A decline in FDI equity inflows from these five countries:

FDI equity inflows from major countries including Singapore, Mauritius, US, UK and United Arab Emirates (UAE) have declined during the six months of this financial year.
Investments from the Cayman Islands and Cyprus fell to $145 million and $35 million, respectively, during April-September 2023 from $582 million and $764 million in the same period a year ago.
On the contrary, there has been a rise in investments from the Netherlands, Japan, and Germany.

FDI inflows declined in these sectors:

FDI inflows have declined in computer software and hardware, trade, services, telecommunications, automobile, pharma and chemicals.

FDI inflows increased in these sectors:

However, construction (infrastructure) activities, construction development and metallurgical industry recorded growth in flows.

Position of Indian states in terms of FDI inflows:

In terms of FDI inflow, a decline was recorded in some states while an increase in foreign investment was recorded in some states.

FDI inflows declined in these states:

In terms of states, Maharashtra led in inflows during this period at $7.95 billion, although it marked a decrease from the $8 billion recorded in the corresponding period last year.
Similarly, foreign investment in Karnataka fell to $2.84 billion in April-September 2023 from $5.32 billion in the same period last year.
FDI witnessed a decline in the quarter in states/UTs such as Gujarat, Rajasthan, Delhi, Tamil Nadu, and Haryana.

Growth in FDI inflows was recorded in these states:

On the other hand, Telangana, Jharkhand and West Bengal recorded growth in FDI during the same period.
FDI inflows have been affected in 2022-23 due to rising interest rates globally and increasing global tensions.
FDI equity inflows had declined by 22 percent to $46 billion in the financial year 2022-23.

FAQ

Answer:- Foreign direct investment (FDI) equity inflow in the country has declined by 24 percent to $ 20.48 billion in the first six months (April-September) of the current financial year 2023-24.

Answer:- This decrease is mainly due to decline in FDI due to less inflow in computer hardware and software, telecommunication, automobile and pharmaceutical sectors.

Answer:- FDI inflows in 2022-23 have been affected due to increasing interest rates globally and increasing global tensions.

Answer:- Maharashtra received the highest inflow of $7.95 billion during this period, but it was less than $8 billion in the same period last year.

Answer:- An increase in FDI was recorded in Telangana, Jharkhand and West Bengal during this period.