India has recorded the highest-ever annual Foreign Direct Investment (FDI) inflow of USD 83.57 billion in the Financial Year 2021-22.
In 2014-2015, the FDI inflow in the country stood at a mere USD 45.15 billion as compared to the highest-ever annual FDI inflow of USD 83.57 billion reported during the financial year 2021-22 overtaking last year’s FDI by USD 1.60 billion despite military operation in Ukraine and COVID-19 pandemic, the Ministry of Commerce & Industry said on Friday.
India’s FDI inflow has increased 20-fold since FY03-04 when the inflow was USD 4.3 billion only.
Further, India is rapidly emerging as a preferred country for foreign investments in the manufacturing sector. FDI Equity inflow in the manufacturing sectors has increased by 76 percent in FY 2021-22 (USD 21.34 billion) compared to the previous FY 2020-21 (USD 12.09 billion).
The following trends in India’s Foreign Direct Investment inflow are an endorsement of its status as a preferred investment destination amongst global investors. It may be noted here that the FDI inflow has increased by 23 percent post-Covid (March 2020 to March 2022: USD 171.84 billion) in comparison to the FDI inflow reported pre-Covid (February 2018 to February 2020: USD 141.10 billion) in India.
In terms of top investor countries of FDI equity inflow, ‘Singapore’ is at the top with 27 percent followed by the US (18 percent) and Mauritius (16 percent) for the FY 2021-22.‘Computer Software & Hardware’ has emerged as the top recipient sector of FDI Equity inflow during FY 2021-22 with around 25 percent share followed by Services Sector (12 percent) and Automobile Industry (12 percent) respectively.
Under the computer software & hardware sector, the major recipient states of the FDI equity inflow are Karnataka (53 percent), Delhi (17 percent), and Maharashtra (17 percent) during FY 2021-22. Karnataka is the top recipient state with a 38 percent share of the total FDI equity inflow reported during the FY 2021-22 followed by Maharashtra (26 percent) and Delhi (14 percent).
A majority of the equity inflow of Karnataka has been reported in the computer software & hardware sectors (35 percent), automobile industry (20 percent), and education (12 percent) during the FY 2021-22.
The steps taken by the Government during the last eight years have borne fruit as is evident from the ever-increasing volumes of FDI inflow being received into the country, setting new records. The Government reviews the FDI policy on an ongoing basis and makes significant changes from time to time to ensure that India remains an attractive and investor-friendly destination.
The Government has put in place a liberal and transparent policy for FDI, wherein most of the sectors are open to FDI under the automatic route. To further liberalise and simplify FDI policy for providing Ease of doing business and attract investments, reforms have been undertaken recently across sectors such as coal mining, contract manufacturing, digital media, single-brand retail trading, civil aviation, defence, insurance, and telecom.