FDI into India expected to rebound in coming months: Economic Survey
2 min read . Updated: 31 Jan 2023, 03:28 PM IST
Premium- Citing the global uncertainty in the wake of the Russia-Ukraine conflict, the Economic Survey tabled in Parliament, said that FDI equity inflows in the manufacturing sector in the first half of the current fiscal (April-September) fell below its corresponding level in the first half of 2021-22.
On account of India's high economic growth, and steps to further improve the business environment of India, the foreign direct investment into the country is expected to rebound in the coming months, the Economic Survey said on Tuesday.
Citing the global uncertainty in the wake of the Russia-Ukraine conflict, the Economic Survey tabled in Parliament, said that FDI equity inflows in the manufacturing sector in the first half of the current fiscal (April-September) fell below its corresponding level in the first half of 2021-22.
The monetary tightening at the global level has further restricted the FDI equity inflows, the survey said.
"A rebound in FDI inflows is, however, expected as the Indian economy sustains its high growth while monetary tightening the world over eventually eases with the weakening of inflationary pressures," the survey said.
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During the April-September period this fiscal, the total FDI equity inflows into India contracted by 14 per cent to $26.9 billion, according to the data of the Department for Promotion of Industry and Internal Trade (DPIIT).
As per details, the total FDI inflows, which include equity inflows, re-invested earnings and other capital, declined to $39 billion during the first six months of the current fiscal year as against $42.86 billion in the year-ago period.
The survey said that the inflows have stayed above the pre-pandemic levels in the first half of this fiscal and cited structural reforms and measures taken by the government to improve the ease of doing business, making India one of the attractive FDI destinations in the world.
"The government has implemented an investor-friendly FDI policy under which FDI up to 100 per cent is permitted through automatic route in most sectors," it said.
Apart from this, the Economic Survey said that India continues to open up its sectors to global investors by raising the investment limits, removing regulatory barriers, developing infrastructure, and improving the business environment.
In H1 FY 2022-23, Singapore emerged as the top investor, followed by Mauritius, the UAE, the USA, the Netherlands and Japan.
According to the survey, the computer software and hardware sector attracted the highest inflows during the first six months of FY 2022-23. It was followed by services, trading, chemicals, automobile and construction (infrastructure) activities.
Also, India has registered its highest-ever FDI inflows of $84.84 billion in 2021-22. However, the survey said that the decline in foreign investments may put pressure on the country’s balance of payments and impact the value of the rupee.
With agency inputs.
