India Surpasses $1 Trillion in FDI

December 10, 2024

India has achieved the milestone in foreign direct investment (FDI), with inflows surpassing $1 trillion between April 2000 and September 2024. This achievement puts stress on India’s status as a secure investment destination.

FDI Inflows Overview

FDI inflows totaled $1,033.40 billion, including equity, reinvested earnings, and other capital. The Department for Promotion of Industry and Internal Trade (DPIIT) provides this data.

Major FDI Contributors

Mauritius leads with 25% of total FDI. Singapore follows closely with 24%. Other contributors include the U.S. (10%), the Netherlands (7%), Japan (6%), and the U.K. (5%). The UAE, Germany, Cyprus, and the Cayman Islands each account for 2%.

FDI flows into several sectors. Notable sectors include services, computer software and hardware, telecommunications, and trading. The construction, automobile, chemicals, and pharmaceuticals sectors also attract investment.

Growth in FDI from 2014 to 2024

From 2014 to 2024, India received $667.4 billion in FDI. This marks a 119% increase compared to the previous decade. Manufacturing sector FDI equity inflows grew by 69%, reaching $165.1 billion.

Government Policies and Future Outlook

The Government of India regularly updates FDI policies. These updates aim to enhance the investor-friendly environment. Experts anticipate further increases in FDI by 2025 due to strong economic indicators and improved industrial performance.

Experts identify growth opportunities in private equity, especially in technology. They suggest reforms in mergers and acquisitions (M&A) rules. Making public takeover regulations more accommodating for foreign investors is also recommended.

FDI Regulations

Most sectors allow automatic FDI. However, telecom, media, pharmaceuticals, and insurance require government approval. Certain sectors, like lotteries and real estate, are restricted from FDI.

FDI is vital for India’s economic growth, supports infrastructure development and helps maintain the balance of payments. Additionally, it stabilises the rupee’s value.

GKToday Facts for Exams:
DPIIT: The Department for Promotion of Industry and Internal Trade is an Government of India body. It promotes industrial growth and facilitates foreign direct investment in various sectors.
PLI: Production Linked Incentive schemes encourage manufacturing. They provide financial incentives to boost production in specific sectors, enhancing India’s competitiveness in global markets.
M&A: Mergers and Acquisitions refer to corporate strategies. They involve the consolidation of companies, aiming to increase market share and operational efficiency in various industries.
FDI Regulations: Foreign Direct Investment regulations govern foreign investments. They vary by sector, with some requiring government approval, ensuring national interests and security are maintained.

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