India attracted a total FDI inflow of USD 67.54 billion from April to December 2020, the Ministry of Commerce & Industry said on March 4, 2021. Accordingly, it is the highest ever inflow for the first nine months of a financial year and 22 per cent higher as compared to the first nine months of 2019-20 which stood at USD 55.14 billion.
Besides, FDI equity inflow grew by 40 per cent in the first 9 months of FY21 to USD 51.47 billion from an year ago period of USD 36.77 billion. “FDI inflow increased by 37 per cent in 3rd Quarter of 2020-21 (USD 26.16 billion) compared to 3rd quarter of 2019-20 (USD 19.09 billion). FDI inflow showed positive growth of 24 per cent in the month of December, 2020 (USD 9.22 billion) compared to December, 2019 (USD 7.46 billion),” an official communique said.
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According to the Centre, FDI is a major driver of economic growth and an important source of non-debt finance for the economic development of India. It has been the endeavor of the Government to put in place an enabling and investor-friendly FDI policy.
The intent all this while has been to make the FDI policy more investor-friendly and remove the policy bottlenecks that have been hindering the investment inflows into the country. The steps are taken in this direction during the last six and a half years have borne fruit, as is evident from the ever-increasing volumes of FDI inflows being received into the country. Continuing on the path of FDI liberalization and simplification, the Government has carried out FDI reforms across various sectors.
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Measures taken by the Government on the fronts of FDI policy reforms, investment facilitation, and ease of doing business have resulted in increased FDI inflows into the country. The following trends in India’s Foreign Direct Investment are an endorsement of its status as a preferred investment destination amongst global investors.
Inflows were boosted by those in the digital sector. Analysts have pointed out that a sizable chunk of these was drawn by Reliance Jio alone.
The FDI inflows take place at a time when domestic private investments have remained elusive in recent years. Investments remain critical to the country’s economic resurgence, as private consumption has been badly bruised by income losses in the aftermath of the pandemic.
According to a report by UNCTAD in January, India and China were two major “outliers” in a gloomy year for FDI, as global inflows plunged 42% on year in the calendar year 2020 to $859 billion, the lowest level since the 1990s.
While India witnessed a 13% year-on-year rise, the highest among key nations, in FDI inflows in 2020, China’s rose 4%. Of course, in absolute term, China remained way ahead, with an inflow of as much as $163 billion, while India’s stood at $57 billion.
The UNCTAD report had pointed out that the UK and Italy saw an over 100% crash each in FDI inflows in 2020, followed by Russia (96% drop), Germany (61%), Brazil (50%), the US (49%), Australia (46%) and France (39%).
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