Foreign Direct Investment (FDI) into India witnessed a notable decline of 13% during the period of April to December 2023, totaling $32.03 billion. This decrease, compared to the $36.74 billion recorded in the same period of the previous fiscal year, is primarily attributed to reduced investments in key sectors such as computer hardware and software, telecom, automotive, and pharmaceuticals, according to recent government data.
However, there was a positive upturn in FDI inflows during the October-December quarter of the current fiscal year, showing an 18% increase to $11.6 billion, up from $9.83 billion during the same quarter in 2022-23.
Data from the Department for Promotion of Industry and Internal Trade (DPIIT) further reveals that the total FDI, including equity inflows, reinvested earnings, and other capital, decreased by approximately 7% to $51.5 billion during the review period, down from $55.27 billion in April-December 2022.
While significant declines were observed from major investing countries like Singapore, the US, the UK, Cyprus, the Cayman Islands, and others, there was a notable rise in inflows from Mauritius, the Netherlands, Japan, and Germany.
In terms of sectors, investments declined across various industries such as computer software and hardware, trading, services, telecommunications, automotive, pharmaceuticals, and chemicals. Nevertheless, growth was witnessed in sectors like construction (infrastructure), development, and power.
Maharashtra emerged as the top destination for FDI, attracting $12.1 billion during the period. However, states like Karnataka experienced a substantial drop in overseas capital inflows, falling to $3.6 billion from $8.77 billion in the corresponding period of the previous fiscal year.
Officials attribute the decline in FDI inflows to rising global interest rates and a deteriorating geopolitical situation. FDI equity inflows into India saw a decline of 22% to $46 billion in 2022-23.
The trends highlight the ongoing challenges and the need for continued efforts to attract foreign investment and address sector-specific issues to ensure sustained economic growth and development in the country.
