FDI Inflow Shrinks By 16% In FY23, Marks First Contraction In A Decade

RBI in its latest monthly bulletin published on Monday, said, "Gross inward FDI flows stood at $71 billion in 2022-23, registering a decline of 16.3 per cent on a y-o-y basis." 

RBI said that the net FDI declined to US$ 28.0 billion in 2022-23 as compared with US$ 38.6 billion a year ago, mainly due to moderation in gross FDI inflows and an increase in repatriation. ( Image Source :Getty )

Gross foreign direct investment (FDI) flows, for the first time in a decade, declined on an annual basis in 2022-23 to $71 billion mainly due to a slowdown in the global economy, reported news agency PTI citing RBI data. The report said that foreign direct investments contracted by 16.3 per cent in the financial year 2022-23 compared to inflows in 2021-22.

According to report, the gross FDI inflows in 2021-22 were $81.97 billion, up 10 per cent over fiscal 2019-20. The previous year-on-year contraction in FDI was in 2012-13 when the inflows declined by 26 per cent to $34.298 billion.

RBI in its latest monthly bulletin published on Monday, said, "Gross inward FDI flows stood at $71 billion in 2022-23, registering a decline of 16.3 per cent on a y-o-y basis." 

RBI said that the net FDI declined to US$ 28.0 billion in 2022-23 as compared with US$ 38.6 billion a year ago, mainly due to moderation in gross FDI inflows and an increase in repatriation. Manufacturing, computer services, and communication services recorded the highest decline in FDI inflows compared with the preceding year.

“The major contributors towards the fall in inflows during the same period were the US, Switzerland, and Mauritius,” RBI officials noted

The bulletin quoted "fDi Intelligence", to say India was the second largest recipient of FDI ($26.2 billion) in the semiconductor industry for the year 2022, second only to the US ($33.8 billion).

Massive investments in capital-intensive chip FDI projects are underway, In line with the Government of India’s efforts to develop the industry, the article said.

It further said foreign portfolio investors (FPIs) turned net purchasers in domestic financial markets in April, primarily in the equity segment ($1.9 billion), which was supplemented by an inflow in the debt segment ($0.2 billion).