In a notable economic development, foreign direct investment (FDI) equity inflows in India saw a significant dip of 24%, amounting to USD 20.48 billion during April-September 2023. This decline was attributed to reduced inflows in sectors such as computer hardware and software, telecom, auto, and pharma, as per official government data. During the corresponding period in the previous fiscal year, FDI inflows stood at USD 26.91 billion.
The data from the Department for Promotion of Industry and Internal Trade (DPIIT) revealed that investments declined across several months, with notable contractions in January-March 2023, registering a 40.55% decrease to USD 9.28 billion. However, September witnessed a rise in FDI to USD 4.08 billion compared to USD 2.97 billion in the same month the previous year.
The overall FDI, encompassing equity inflows, reinvested earnings, and other capital, contracted by 15.5% to USD 32.9 billion during this review period. Major contributors to the decrease in FDI equity inflows included countries like Singapore, Mauritius, the US, the UK, and the UAE.
On a sectoral basis, inflows decreased in computer software and hardware, trading, services, telecommunication, automobile, pharma, and chemicals. However, there was growth in construction (infrastructure) activities, construction development, and the metallurgical industry.
While Maharashtra remained the state receiving the highest inflow at USD 7.95 billion, there were declines in states like Karnataka, Gujarat, Rajasthan, Delhi, Tamil Nadu, and Haryana. In contrast, FDI in Telangana, Jharkhand, and West Bengal reported growth during this period.
Analysts attribute the decline in FDI inflows to global hardening interest rates and a deteriorating geopolitical situation, impacting India’s attractiveness for foreign investments.
