FDI Inflows Drops 13% In April-December 2023

However, during the October-December quarter of the current fiscal year, FDI inflows witnessed an increase of 18 per cent, reaching $11.6 billion

Foreign direct investment (FDI) inflows in India fell by 13 per cent to $32.03 billion in April-December 2023. This decline was primarily attributed to reduced investment in sectors such as computer hardware and software, telecom, automotive, and pharmaceuticals, according to the most recent government data. Comparatively, FDI inflows amounted to $36.74 billion during the corresponding nine months of the previous fiscal year.

However, during the October-December quarter of the current fiscal year, FDI inflows witnessed an increase of 18 per cent, reaching $11.6 billion compared to $9.83 billion recorded during the same quarter of 2022-23.

Data from the Department for Promotion of Industry and Internal Trade (DPIIT) revealed that the total FDI, encompassing equity inflows, reinvested earnings, and other capital, decreased by approximately 7 per cent to $51.5 billion during the reviewed period, compared to $55.27 billion in April-December 2022.

Throughout the nine-month period of this fiscal year, FDI equity inflows dwindled from significant countries, including Singapore, the US, the UK, Cyprus, and the UAE.

Significant declines in investments were observed from the Cayman Islands and Cyprus, amounting to $215 million and $796 million, respectively, during April-December 2023, in contrast to the comparative figures of $624 million and $1.15 billion observed in the previous year.

Nevertheless, there was an uptick in inflows from Mauritius, the Netherlands, Japan, and Germany. 

On a sectoral basis, investments declined in computer software and hardware, trading, services, telecommunications, automotive, pharmaceuticals, and chemicals. Conversely, there was growth in inflows within the construction (infrastructure), development, and power sectors. In terms of states, Maharashtra saw the highest influx of $12.1 billion during the period, compared to $10.76 billion in the corresponding period of the previous year.

In Karnataka, overseas capital inflows plummeted to $3.6 billion in April-December 2023 from $8.77 billion in the corresponding period of the previous fiscal year. Other states/Union Territories experiencing a decline in FDI during the reviewed period included Delhi, Tamil Nadu, West Bengal, Rajasthan, and Haryana. However, there was a positive growth in inflows recorded in Gujarat, Telangana, and Jharkhand.

According to a news agency PTI report citing an official, the rising global interest rates and deteriorating geopolitical situation had an adverse impact on FDI inflows. FDI equity inflows into India saw a decline of 22 per cent to $46 billion in 2022-23.