Mumbai: India Receives Record FDIs. Out of every $ 100 overseas investors invest worldwide, $ 20 is invested in India. The India received foreign direct investment (FDI) worth $165 billion in the last two years. These were pandemic years when the world reeled from Covid-19. The trendindicates that India has successfully reversed the negative impacts of the brain drain. Most non-resident Indians have turned into goodwill ambassadors, repatriating their foreign savings. They inspire millions of overseas investors to invest in India. Their dedication, hard work and enterprise generate confidence in world markets, making our country a destination point for investments. Today we rank high as the recipient of maximum NRE funds and foreign direct investments.
India Receives Record FDIs foreign direct investments of $ 83.57 billion in 2021-22 on various measures like an evolving image of a happening economy, policy reforms and ease of business. The FDI inflows comprise equity inflows, reinvested earnings and fresh capital. In 2020-21, the inflow stood at $ 81.97 billion, up from $ 74.39 billion in 2019-20 and $ 62 billion in 2018-19. The foreign inflows are increasing despite challenges like a military operation in Ukraine and COVID-19 pandemic. The Department of Promotion of Industry and Internal Trade (DPIIT), FDI has assessed equity inflow in India at US$ 572.81 billion between April 2000-December 2021.
The FDI equity inflow in manufacturing sectors has increased by 76 per cent in 2021-22 to $ 21.34 billion compared to 2020-21 at $ 12.09 billion. The increase has been 20-fold since 2003-04, when the inflows were $ 4.3 billion only.
Regarding top investor countries, Singapore is at the top with 27%, followed by the US at 18% and Mauritius at 16% during the last fiscal. The Indian economy is carving a status as a preferred investment destination amongst global investors. Among sectors, computer software and hardware attracted maximum inflows. The services sector and automobile industry followed it. Karnataka is the top recipient state with a 38 % share during 2021-22, followed by Maharashtra at 26% and Delhi at 14%. The government has put a liberal and transparent foreign investment policy, wherein most sectors are open to FDI under the automatic route.
FDI has been a significant non-debt financial inflow for the country’s economic development. Foreign investors come to India to take advantage of the relatively lower wages and special investment privileges like tax exemptions. The FDI helps the country achieve technical know-how and generate employment.
Under foreign exchange laws in India, termed FEMA, the investment made by a person resident outside India in an Indian company or the capital of a limited liability partnership (LLP) qualifies as FDI. Investment through equity by a person resident outside India in an unlisted Indian company or 10% of the paid-up capital of a listed Indian company also qualifies as FDI. Such investment is under the primary (subscription) or secondary (acquisition) routes.
The FDI policy prohibits the lottery sector; gambling and betting; Nidhi companies, which borrow and lend money between members; real estate and the construction of farmhouses. FDI can invest in developing townships, residential & commercial complexes, roads, bridges and real estate investment trusts. FDIs are prohibited from manufacturing cigars, cheroots and cigarettes, or tobacco products. There is no permission for FDIs in atomic energy.
FDI in sectors can be made either through automatic or government routes. Under the automated way, the non-resident investor or the Indian company does not require any approval from the government for the FDI. Prior consent by the government is mandatory under the government route,
The FDI policy needs further liberalisation and simplification to ease doing business and attract investments. Fundamental reforms can catalyse the intensive capital sectors such as coal mining, contract manufacturing, digital media, single-brand retail trading, civil aviation, defence, insurance and telecom. In IT and pharmaceutical sectors also appear promising. But even when India was devastated by the second wave, companies from a record 101 nations poured money into 57 sectors in 2021-22. The space occupied by India in investors’ minds augurs well for the economy’s future.
India is carving its well-deserved niche globally. Rightly said, “It’s never too late to be what you might have been.”
-Hargovind Sachdev
