Gross FDI inflows rose 38% year-on-year in April and FDI in equity surged by 60%, aided by a conducive base. However, the inflows were still higher than the April 2019 (pre-pandemic) level and appeared to have beaten the damaging impact of the second Covid wave this year.
Gross inflows – which include FDI in equity, reinvested earnings, equity capital of unincorporated bodies and other capital — hit $6.24 billion in April, against $4.53 billion a year before, showed the data released by the commerce and industry ministry on Wednesday. Inflows of FDI in equity rose to $4.44 billion in April from $2.77 billion a year before.
The inflows take place at a time when domestic private investments have remained elusive in recent years. Investments remain critical to the country’s economic resurgence, as private consumption has been badly bruised by income losses in the aftermath of the pandemic.
Going forward, the bigger challenge would be to sustain the high growth in FDI inflows, once the favourable base effect wanes from August. Interestingly, FDI inflows last fiscal were greatly boosted by those into the digital sector. Analysts have already pointed out that a sizable chunk of the FDI was drawn by Reliance Jio alone.
Gross FDI inflows had risen by 10% to touch an all-time-high of $81.7 billion in FY21, although the pace of growth decelerated in the March quarter. Still, the inflows remained very encouraging last fiscal, given the devastation and disruption caused by the pandemic across the globe.
According to the World Investment Report 2021 by the UN Conference on Trade and Development (UNCTAD), released on Monday, FDI inflows into India rose 27% to $64 billion even when global inflows crashed by 35% in 2020.
Mauritius emerged as the top investing country, with a 24% share of the FDI Equity inflows, followed by Singapore (21%) and Japan (11%).
‘Computer Software & Hardware’ was the top sector to have received the FDI in April, with about 24% share, followed by the services (23%) and education (8%).
Karnataka remained the top recipient state, with 31% share of the total FDI in equity inflows, followed by Maharashtra (19%) and Delhi (15%).
