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

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.