FDI: FDI equity inflow declined by 24 percent in April-September half, reaching 20.48 billion dollar

Foreign direct investment (FDI) equity inflows into the country declined by 24 per cent to $20.48 billion in the first six months (April-September) of the current financial year. FDI has declined due to lower inflows into computer hardware and software, telecommunications, automobile and pharmaceutical sectors. According to government data, FDI inflow during the first six months of the last financial year i.e. April-September was $26.91 billion.

Even during January-March this year, FDI declined by 40.55 percent to $9.28 billion. During April-June last year, it had declined by 34 percent to $10.94 billion. According to data from the Department for Promotion of Industry and Internal Trade (DPIIT), foreign investment has declined in April, May, June, July and August. However, it increased to $4.08 billion in September, whereas it was $2.97 billion in the same month last year.

Total FDI declined by 15.5 percent to $32.9 billion during the period under review from $38.94 billion in April-June, 2022. Total FDI includes equity inflows, reinvested income and other capital. 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. However, investment from the Netherlands, Japan and Germany has increased.

Sector-wise, FDI inflows declined in computer software and hardware, trade, services, telecommunications, automobile, pharma and chemicals. However, construction (infrastructure) activities, construction development and metallurgical industry recorded growth in flows.

State-wise, Maharashtra received the highest inflows during this period at $7.95 billion, but this was lower than $8 billion in the same 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. Other states/UTs where FDI declined in the quarter include Gujarat, Rajasthan, Delhi, Tamil Nadu and Haryana.

On the other hand, Telangana, Jharkhand and West Bengal recorded growth in FDI during this period. An official said rising interest rates globally and rising global tensions impacted FDI in 2022-23. FDI equity inflows had declined by 22 percent to $46 billion in the financial year 2022-23.