India Sees Mixed Trends in FDI Inflows Amid Decline in Key Sectors

Foreign direct investment (FDI) equity inflows in India fell by 3.49% to USD 44.42 billion in 2023-24, with declines in sectors like services and telecom. However, inflows rose in construction and power sectors. Notably, Maharashtra received the highest inflows, while Karnataka saw a significant drop.

Foreign direct investment (FDI) equity inflows in India declined 3.49 per cent to USD 44.42 billion in 2023-24 due to lower infusion in sectors such as services, computer hardware and software, telecom, auto and pharma, according to the government data.

FDI inflows stood at USD 46.03 billion during 2022-23.

Inflows during January-March FY24 , however, rose by 33.4 per cent to USD 12.38 billion as against USD 9.28 billion in the year-ago period.

The total FDI -- which includes equity inflows, reinvested earnings and other capital -- declined marginally by one per cent to USD 70.95 billion during 2023-24 from USD 71.35 billion in 2022-23, data from Department for Promotion of Industry and Internal Trade (DPIIT) showed.

In 2021-22, the country received the highest ever FDI inflows of USD 84.83 billion.

During the last fiscal, FDI equity inflows decreased from major countries, including Mauritius, Singapore, the US, the UK, UAE, Cayman Islands, Germany, and Cyprus.

However, inflows increased from the Netherlands and Japan.

Sectorally, inflows contracted in services, computer software and hardware, trading, telecommunication, automobile, pharma and chemicals.

In contrast, construction (infrastructure) activities, development and power sectors registered healthy growth in inflows during the period under review.

FDI equity inflows into India declined 22 per cent in 2022-23.

The data also showed that Maharashtra received the highest inflow of USD 15.1 billion during the last fiscal. It was USD 14.8 billion in 2022-23. Similarly, inflows into Gujarat rose to USD 7.3 billion in 2023-24 from USD 4.7 billion in 2022-23. Growth was also recorded in Tamil Nadu, Telangana and Jharkhand.

Overseas capital inflows in Karnataka plunged to USD 6.57 billion from USD 10.42 billion in 2022-23. Other states/Union Territories where FDI dipped during the period under review included Delhi, Rajasthan, Uttar Pradesh and Haryana.