For 2020-2021 India has registered the highest Foreign Direct Investment (FDI) inflow.
India’s inflow of Foreign Direct Investment (FDI) is the highest compared to the last seven years (2014-2021). The total Foreign Direct Investment inflow in the previous seven years is 58 per cent of the total FDI inflow in the last 21 financial years.
According to the Commerce and Industry Ministry, Mauritius, the United States of America (USA), Netherlands, Singapore, Cayman Islands, the United Kingdom, and Japan are top countries for the Foreign Direct Investment Equity Inflows.
Commerce and Industry Minister Piyush Goyal expects increasing Foreign Direct Investment in the following years and structural reforms being taken by the government.
Understanding Foreign Direct Investment
Foreign Direct Investment (FDI) – when a company or investor purchases an interest in a company in another country. It is one type of cross border investment. Such investments help in creating links between economics. This investment is not only a capital investment but can also be an investment in management, technology and material.
Foreign Direct Investment helps increase the economic growth for both countries that are receiving and making the investment.
Foreign Direct Investment also helps developing nations as it helps in supporting infrastructure, employment for the local workers. Foreign Direct Investment helps the investor as it helps them expand their company. Such investment also helps in transferring technology among various economies.
India and Foreign Direct Investment
Foreign Direct Investment significant monetary economic development for India. After the economic liberation in 1991, there has been a steady increase in Foreign Direct Investment.
Since the financial year 2014-2015, Foreign Direct Investment has been consistently increased. For 2014-2021, Foreign Direct Investment increased by 65.3% compared to 2007-2014.
Karnataka, Maharashtra, Delhi and Gujarat have received the highest FDI equity inflow. In the financial year 2021, there was FDI investment in renewable energy, Indian logistics start-up, data center project, ATC Telecom Infra Pvt Ltd, multiple data centers.
Foreign Direct Investment) in India can happen through Automatic Route where investors or Indian companies do not require approval from the Government of India. Government Route under this government approval is necessary from the Government of India.
Future road
One of the leading sectors to attract the most significant amount of FDI, 19 per cent, is the computer software and hardware sector. Service sectors received 15 per cent of FDI, and telecommunications and construction sectors increased FDI inflow by seven per cent. There was an 8 per cent increase in FDI inflow in the trading sector.
The government has also taken various measures to increase investment in India. The government has also taken steps to use the assets effectively.
- India and the United Kingdom have strengthened bilateral ties for better trading partnerships.
- To boost the telecom sector, the government has allowed 100 per cent FDI via the automatic route.
- The government has also amended Foreign Exchange Management to increase FDI in the insurance sector.
- 44 Indian companies have received approvals for FDI, which will help in the joint production of defense items with international organizations.
- There have also been changes in the insurance sectors expected to benefit private health insurance firms.
Due to the Covid-19 pandemic putting forward various challenges, India attracted the highest ever annual Foreign Direct Investment. It is expected that recent reform will help in long term growth which will help in FDI inflow in the next five years. Investors are interested in investing in the Indian market in the short and long term.
