At $44.85 bn, FDI inflows saw 5-year low in 2017-18: DIPP

Prime Minister Narendra Modi’s frequent junkets abroad do not seem to have resulted in a commensurate increase in foreign direct investment. In fact, the FDI growth rate recorded a five-year low of 3 per cent at $44.85 billion in financial year 2017-18, according to the latest data released by the Department of Industrial Policy and Promotion (DIPP).

Foreign fund inflows in the country grew 8.67 per cent in 2016-17, 29 per cent in 2015-16, 27 per cent in 2014-15, and 8 per cent in 2013-14. In 2012-13, FDI inflows recorded a negative growth of 38 per cent.
According to PTI, experts said it was critical to revive domestic investments and further ease doing business in the country to attract foreign investors.
A United Nations Conference on Trade and Development report too has recently stated that FDI in India decreased to $40 billion in 2017 from $44 billion in 2016. However, outflows from India, the main source of FDI in South Asia, more than doubled to $11 billion, the report said.
UNCTAD Secretary-General Mukhisa Kituyi said, “A downward pressure on FDI and slowdown in global value chains are a major concern for policymakers worldwide, and especially in developing countries,” reports PTI.
The main sectors that received foreign inflows in the last financial year include
  • Services: $6.7 billion
  • Computer software and hardware: $6.15 billion
  • Telecommunications: $6.21 billion
  • Trading: $4.34 billion
  • Construction: $2.73 billion
  • Automobile: $2 billion
  • Power: $1.62 billion
Mauritius was the largest source of FDI in India with $15.94 billion in 2017-18, followed by Singapore ($12.18 billion), the Netherlands ($2.8 billion), the USA ($2.1 billion) and Japan ($1.61 billion).
The data showed that FDI equity inflow of $44.8 billion in 2017-18 is the highest ever for any financial year.
India requires huge investments to overhaul its infrastructure. A decline in foreign inflows could put pressure on the country’s balance of payments and may also impact the value of the rupee.