India has recorded the highest ever annual FDI inflow of $83.57 billion in the financial year 2021-22 as capital flows into the country increased by $1.60 billion year-on-year and by 23 per cent since the Covid.
This is a near doubling from the FDI flows of around $45.15 billion in 2014-2015. India’s FDI inflows have increased 20-fold since FY2003-2004, when the inflows were a mere $4.3 billion.
India is also rapidly emerging as a preferred country for foreign investments in the manufacturing sector. FDI equity inflows into manufacturing increased by 76 per cent to $21.34 billion in FY 2021-22 compared to $12.09 billion in the previous fiscal (FY 2020-21).
It may be noted that FDI inflow to India increased by 23 per cent post-Covid to $171.84 billion (March 2020 to March 2022) in comparison to FDI inflow of $141.10 billion reported in the pre-Covid period (February 2018 to February 2020).
In terms of top investor countries of FDI equity investment, ‘Singapore’ is at the top with 27 per cent, followed by US (18 per cent) and Mauritius (16 per cent) for FY 2021-22.
‘Computer Software and Hardware’ has emerged as the top recipient sector of FDI equity inflow during FY 2021-22 with around 25 per cent share, followed by service sector (12 per cent) and automobile industry (12 per cent), respectively.
Under the sector `Computer Software and Hardware’, the major recipient states of FDI equity inflow are Karnataka (53 per cent), Delhi (17 per cent) and Maharashtra (17 per cent) during FY 2021-22. Karnataka is the top recipient state with 38 per cent share of the total FDI equity inflow reported during FY 2021-22, followed by Maharashtra (26 per cent) and Delhi (14 per cent). Majority of the equity inflow into Karnataka has been reported in the sectors `Computer Software & Hardware’ (35 per cent), Automobile Industry (20 per cent) and `Education’ (12 per cent) during FY 2021-22.
Government o India has put in place a liberal and transparent policy for FDI, wherein most of the sectors are open to FDI under the automatic route. To further liberalise and simplify FDI policy for providing Ease of doing business and attract investments, reforms have been undertaken recently across sectors such as Coal Mining, Contract Manufacturing, Digital Media, Single Brand Retail Trading, Civil Aviation, Defence, Insurance and Telecom.