Foreign Direct Investment in India fell 7.3% on year in July-September quarter to $ 9.54 billion due to sharp fall in inflows into computer software and hardware sectors , trading and construction, according to government data.
For the April-September period the FDI equity inflows were down 24% on year to $20.4 billion. The cumulative FDI flows in April-September, which includes reinvested earnings and other capital, declined 15.1% on year to $33.1 billion.
Year-on-year decline in monthly FDI inflows have been visible since July 2022 and this is the period that saw a sharp drop in funding to start-ups.
Services, computer software and hardware, and trading are the biggest recipients of FDI in India and a sharp drop was seen in both these categories in the first half.
Service sector, which includes financial, banking and business outsourcing, saw FDI decline to $ 3.8 billion in Apr-September this year from $ 4.1 billion in the same period last year.
In computer software and hardware the inflows slumped to $ 920 million from $ 3.2 billion last year. In trading the FDI declined to $ 525 million from $4.7 billion.
FDI equity inflows saw a big jump in volumes in 2020-21 and FY 2021-22 when it touched $58 billion per year. In FY 23 the equity investments from overseas was back to $ 46 billion, the levels seen in the previous years.
Most of the FDI in April-September of around $ 5.2 billion was routed through Singapore. Mauritius was the second biggest source of FDI during the period with inflows of $ 2.9 billion, followed by Japan at $ 2.09 billion and the US at $ 2.05 billion.
The fall in FDI the second quarter followed a much deeper decline seen in exports in April-June when it was down 34% to $10.9 billion.