Recently, inflows via foreign direct investments (FDI) have crossed a milestone. It is between the period of April 2000 and September 2024, when fdi investments in India grew to $1 trillion, which indicates India is a crucial destination for investments around the world.
Key FDI Investments Data
During the period mentioned above, the amount of fdi inflows including equity investments, other forms of capital investments, and reinvestments of earnings cumulated to a total of $1033.40 billion as per Department for Promotion of Industry and Internal Trade (DPIIT) data.
It is interesting to notice that one-fourth of this investment came from the Mauritius route, then around 24% came from the Singapore route, 10% from the US, seven and six percent from the Netherlands, and Japan respectively. From the UK, only 5% came and 3% from UAE.
The exact amount of investments that came from the top three routes mentioned above are as follows –
- Mauritius – $177.18 billion
- Singapore – $167.47 billion
- US – $67.8 billion
Sectoral FDI Investment Analysis
The pivotal sectoral which attracted most of the investments via the FDI route includes the following –
- Services
- Computer software & hardware
- Trading
- Telecommunications
- Constructions & development
- Automobile
- Chemicals
- pharmaceuticals
The manufacturing sector witnessed a growth of around 69% in FDI inflow between 2014 and 2024 compared to that of the preceding ten years. Overall investments in the last ten years have increased by 119% compared to the preceding ten years. Between 2014 and 2024, the FDI inflow stood at $667.4 billion, which is 119% higher than the FDI inflow registered from 2004 to 2014. This indicates the growing ease of doing business in India and safety as well. The ease of doing business in the country has gone up drastically with the government policies allowing 100 FDI under automatic route in most of the sectors, except the strategically important ones. The policies are evaluated on a constant basis, to make them more suitable for investors around the world.
FDI Inflow and Value of Rupee and Foreign Reserve
With the growing FDI inflow, India’s forex reserves have also been growing and so has the value of the rupee, and the balance of payment is improving. The forex reserve of India jumped to $658.091 billion at the end of November. While the reserves dropped by $1.31 billion in the preceding week, to $656.582 billion, this jump in the reserve shows that the economy is on track. The foreign currency assets increased by $2.061 billion during that week as well.
FDI Investment Outlook
As per experts, this momentum is here to stay in the coming year as well. With the macroeconomic factors favorable, along with growing industrial outputs, and lucrative PLI schemes, FDI inflow in India is expected to rise further in 2025, even amidst geopolitical challenges.
The mergers and acquisition space has been structurally reformed by the government with the help of SEBI in recent years, which makes foreign investments in the same seamless. On the other hand, FDI inflows are expected to be robust due to policy changes in the US, and China’s economy, which in turn will affect India’s economy as well. The increasing FDI inflow in the country is crucial for the economy’s wellbeing and growth, as India needs huge capital investments for infrastructural boost as well.
Source: CNBC TV18
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