The inflow of Foreign Direct Investment (FDI) to India has jumped to $60.08 billion in the last three years of Narendra Modi government at the Centre. According to a release by Ministry of Commerce and Industry, the FDI inflow to India in the financial year 2016-17 was $60.08 billion, which was around $5 billion more than the record $55.6 billion recorded in 2015-16.
In the financial year ending March 2015, India had received $45.15 billion as FDI as against the $36.05 billion received in 2013-14.
PM Modi came to power in May 2014 and since then he has taken a number of measures to attract foreign investment to the country. The huge FDI in 2016-17 may surprise many as, incidentally, Modi government had demonetised old currency notes of Rs 500 and Rs 1000 towards the end of 2016. Several critics had then claimed that the daring demonetisation decision would derail the Indian economy.
According to the release, India has now become the “topmost attractive destination for foreign investment.” It says, “Increased FDI inflows in the country are largely attributed to intense and bold policy reforms it (government) undertook to bring pragmatism in the FDI regime.”
Reform measures undertaken by Modi government since 2014 include liberalisation of conservative sectors like rail infrastructure and defense, medical devices, and construction development. In September 2014, the government had launched ‘Make in India’ initiative which led to an increase of around $9 billion in the first year itself.
In the following year, FDI policy provisions were overhauled in sectors such as Construction Development, Broadcasting, Retail Trading, Air Transport, Insurance, and Pension. The introduction of composite caps in the FDI policy and raising the FIPB approval limit were also undertaken in the same year to promote ease of doing business in the country, says the release.
In the last financial year, the government permitted 100% FDI in retail trading of food products. This was introduced with an “unqualified condition that such food products have to be manufactured and/or produced in India.”
Here are the FDI trends in the last three years of Modi rule:
FDI trends from 2014-15 to 2016-17
•Total FDI equity inflow received in the last three financial years is $ 114.41 billion. This is 40% more than the previous three financial years (2011-12 to 2013-14 when the total FDI was $ 81.84 billion.
• FDI equity inflow received through approval route was $ 11.69 billion, which is 64% higher than the previous three years ($ 7.15 billion).
• Manufacturing sectors witnessed a growth of 4% in comparison to previous three financial years (From $ 48.03 billion to $ 50.09 billion).
• Total FDI inflow during last three years increased by 38%.
FDI trends after the launch of Make in India initiative (October 2014 to March 2017)
• Total FDI equity inflow received in the last 30 months since the launch of Make in India initiative is $ 99.72 billion, which is an increase of 62% compared to previous 30 months (April 2012 to September 2014 ( $ 61.41 billion).
• Manufacturing sectors witnessed a growth of 14% in comparison to previous 30 months (from $35.52 billion to $40.47 billion).
• Total FDI inflow increased by 51%, i.e. $137.44 billion in comparison to $90.98 billion of the previous 30 months before the launch of Make in India initiative.
FDI trends in 2016-17
• Total FDI equity inflow received during 2016-17 is $ 43.48 billion, which is an increase of 9% compared to 2015-16 ( $ 40.00 billion). This is the highest ever for a particular financial year.
• The FDI equity inflow received through approval route during 2016-17 was US$ 5.90 billion, which is 65% higher than the previous year ($ 3.57 billion).
• Manufacturing sectors witnessed 52% growth in comparison to 2015-16 (i.e. from $ 13.35 billion to $ 20.26 billion).
• Total FDI inflow grew by 8% to $60.08 billion in 2016-17 in comparison to $55.56 billion of the previous year. This is the highest ever FDI inflow for a particular financial year. Before this, the highest FDI inflow was reported in 2015-16.