The total foreign direct investment (FDI) inflows in FY22 reached a record $ 83.6 billion, but year-on-year growth slowed to just 2% from 10% last year, mainly due to an unfavorable basis. Gross FDI includes FDI equity, reinvested earnings, equity capital of unorganized companies and other capital.
Significantly, FDI inflows into manufacturing increased 76% to $ 21.3 billion in the last fiscal year, despite the epidemic blues, surpassing overall FDI growth, data released by the Department for the Promotion of Industry and Domestic Trade (DPIIT) showed on Friday.
Foreign and domestic investments remain important for India’s economic recovery, as personal spending maintains a roller-coaster ride after the epidemic.
According to the data, at 1 171.84 billion, the gross FDI inflows jumped 23% compared to the pre-codified (February 2018 to February 2020) reported outbreak of the epidemic (March 2020 to March 2022).
In FY22, Singapore remains the top FDI source with 27% share, followed by US (18%) and Mauritius (16%). The computer software and hardware division emerged as the top recipient of FDI equity flows in FY22, with a 25% stake, followed by the services sector (12%) and automobiles (12%).
Among the states, Karnataka was the top recipient, accounting for 38% of the total FDI equity inflows in FY22, followed by Maharashtra (26%) and Delhi (14%).
The increase in FDI in the mirror of production is improving the performance of the Gross Value Added (GVA) sector. According to the second advance estimate, production GVA in FY22 is projected to increase by 10.5%, compared to -0.5% in the previous year and -2.9% in the pre-epidemic year of FY20. The Purchasing Managers Index also suggests steam collection of manufacturing activity in the second half of FY22. The long-elusive private capex has also begun to grow, especially in sectors such as metals, mining, chemicals and electronics, former CII president TV Narendran said recently.
Asked if the FDI system would be made more liberal, DPIIT secretary Anurag Jain recently told FE that most sectors of the economy have already been opened and almost all flows are allowed under automated routes. “India’s FDI regime is one of the most liberal in the world. Apart from what has been announced in the budget, there is no proposal under consideration to open any other sector, ”said Jain.