FDI Inflows into India Achieves New Milestone Crossing $500 Billion Mark

Last week the Commerce ministry stated that the FDI inflows in the country during the July-September quarter were $28.1 billion and the FDI equity inflows during the first half of 2020-21 have shown 15 percent growth in US dollar terms and 23 percent growth in rupee terms. Now a new report indicates that the foreign direct investment (FDI) equity inflows into India has crossed the $500 billion milestone during April 2000 to September 2020 period, firmly establishing the country’s credentials as a safe and key investment destination in the world.

According to the data of the Department for Promotion of Industry and Internal Trade (DPIIT), the inflows during the period stood at $500.12 billion. About 29 percent of the FDI came through the Mauritius route. It was followed by Singapore (21 percent), the US, the Netherlands, Japan (each 7 percent), and the UK (6 percent). India received $144.71 billion from Mauritius and about $106 billion from Singapore during the period under review. The other big investors have been from Germany, Cyprus, France and Cayman Islands.

Since 2015-16, FDI inflows have been recording significant growth. In that fiscal, the country received $40 billion FDI, an increase of 35 percent over the previous year. In 2016-17, 2017-18, 2018-19 and 2019-20, the investments stood at $43.5 billion, $44.85 billion, $44.37

The key sectors which attracted the maximum of these inflows include services segment, computer software and hardware, telecommunications, trading, construction development, automobile, chemicals, and pharmaceuticals

billion and $50 billion, respectively. The key sectors which attracted the maximum of these inflows include services segment, computer software and hardware, telecommunications, trading, construction development, automobile, chemicals, and pharmaceuticals.

“Indian FDI journey began with enactment of FEMA (that replaced the draconian FERA) in 1999. Looking back, the half-trillion dollar FDI in India is an indication of foreign investor’s firm belief in India’s strong economic fundamentals, stable political outlook and sustained economic growth which generated returns for investors even during the global recession of 2007-08,” said Nischal Arora, Partner-Regulatory, Nangia Andersen India.

He said as the country cautiously steps into the next decade under the shadow of the ongoing pandemic, it is imperative that the government continues its measures to attract FDI in the manufacturing and high-end technology sectors. Rajat Wahi, Partner, Deloitte India, said FDI equity inflows crossing $500 billion “is indeed a great milestone, and continues to show the trust and faith that the global investors have in India’s growing economy”. This growth is a strong reflection of the market potential of India coupled with the steady state of market reforms that India has undertaken since 2000, including opening up of various sectors of the economy to 100 percent FDI over the last 5 years, he said.