FDI Companies in India Face Sales Growth Moderation

The RBI reports a moderation in sales growth for FDI companies in India, with net sales increasing by 9.3% in 2023-24, down from 20.3% the previous year. Manufacturing and services sectors saw lower growth rates, though operating profits improved due to cost rationalization.

The Reserve Bank of India (RBI) announced on Tuesday that the growth in net sales of select Foreign Direct Investment (FDI) companies in India has slowed to 9.3% during the fiscal year 2023-24. This marks a significant decrease from the 20.3% growth recorded in the previous year, attributed to the normalization of post-pandemic demand conditions.

The financial performance data was compiled from audited annual accounts of 2,418 non-government, non-financial FDI companies that followed the Indian Accounting Standards (Ind-AS) over the last three accounting years. Manufacturing and services sectors experienced lower sales growth rates, at 6.4% and 12.7% respectively. However, wholesaling, retailing, and utilities sectors saw consistent sales performance.

Despite the lower sales growth, the companies improved their operating profits significantly by implementing cost rationalization strategies—remarkably increasing by 20.4% in 2023-24. Foreign investment predominantly flowed from Singapore, Mauritius, and the US, while internal funding sources played a larger role in financial strategies compared to the reliance on external sources seen previously.