Foreign direct investment (FDI) equity inflows in India have experienced a significant decline, dropping by 24% to USD 20.48 billion during the period of April to September 2023, as reported by government data. This downturn is attributed to reduced inflows in key sectors such as computer hardware and software, telecom, auto, and pharma. In contrast, FDI inflows stood at USD 26.91 billion during the same period in the previous fiscal year.
The contraction in FDI inflows was observed across several months, with investments falling in April, May, June, July, and August. However, there was a notable uptick in September, reaching USD 4.08 billion compared to USD 2.97 billion in the same month the previous year, according to data from the Department for Promotion of Industry and Internal Trade (DPIIT).
The overall FDI, encompassing equity inflows, reinvested earnings, and other capital, contracted by 15.5% to USD 32.9 billion during the review period, compared to USD 38.94 billion in April-June 2022. FDI equity inflows saw a decline from major countries, including Singapore, Mauritius, the US, the UK, and UAE. Investments from the Cayman Islands and Cyprus notably decreased, while inflows increased from the Netherlands, Japan, and Germany.
Sectorally, various industries, such as computer software and hardware, trading, services, telecommunication, automobile, pharma, and chemicals, experienced a contraction in FDI inflows. However, there was growth in sectors like construction (infrastructure) activities, construction development, and the metallurgical industry.
Analysing FDI inflows at the state level, Maharashtra received the highest inflow of USD 7.95 billion during the period, although it marked a decline from USD 8 billion in the corresponding period the previous year. Similar decreases were observed in states such as Karnataka, Gujarat, Rajasthan, Delhi, Tamil Nadu, and Haryana. In contrast, FDI in Telangana, Jharkhand, and West Bengal reported growth during the same period.
An official cited global factors such as rising interest rates and geopolitical challenges as impacting FDI inflows into India in the fiscal year 2022-23. FDI equity inflows into India registered a 22% decline, amounting to USD 46 billion in the same fiscal year.
