Foreign investors greet India with higher FDI inflows in H1; confidence up even amid slowdown

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Published: January 6, 2020 5:20:09 PM

The investment has come at a time when the global economy and investment environment have shown subdued growth.

fdi, foreign direct investment, foreign investment in india, india's economic growth, service sectorFDI inflows play an important role as India faces huge infrastructure funding requirements to boost growth.

Foreign investment has come to rescue India’s sagging economy by catalysing the growth by boosting investment. In the first half of the current fiscal year, Foreign Direct Investment (FDI) in India rose by 15 per cent (in $ terms), according to the Department for Promotion of Industry and Industrial Trade (DPIIT). The investment has come at a time when the global economy and investment environment have shown subdued growth. This also reflects the confidence of international investors in India’s market. FDI inflows play an important role as India faces huge infrastructure funding requirements to boost growth.

“Various efforts undertaken by the government to improve the business environment have resulted in the improved ease of doing business ranking of India. In addition, to attract foreign investment, the government has opened up various sectors for foreign investment and has eased norms for certain sectors,” said a Care Ratings report. Going forward, there are expectations of a further surge in the FDI investment as India continues to remain one of the favoured destinations for the investment by foreigners. In the second half of FY20, Care Ratings has anticipated FDI equity inflows to the tune of around USD 25 billion.

Also Read: Has India’s economic slowdown bottomed out? Early indicators suggest green shoots of economic revival

However, the monthly trend of FDI inflow doesn’t show a very positive movement. In H1 FY20, the maximum FDI was received in the month of June ($ 7282 million), which drastically fell in the following months to a mere $ 2,741 million in the month of September 2019, according to DPIIT.

Meanwhile, in H1 FY20, Maharashtra, Delhi, Karnataka, and Gujarat accounted for more than 70 per cent of the total FDI equity inflows. Delhi had the highest 27 per cent share in the total FDI equity inflows and these inflows were 27 per cent higher on-year. Services sector, including financial, banking, insurance, non-financial business, outsourcing, R&D, courier, technology testing and analysis, continued to receive the highest FDI equity inflows aggregating USD 4.5 billion in H1 FY20.

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