India may not get the same amount of foreign direct investment (FDI) in the current financial year as compared to FY23, but I don’t see it as a “material factor”, said Piyush Goyal at the ET Global Business Summit on Friday.
“It (FDI) still continues to come in. Very often, when you see a rapid growth on any statistic…you need some time for it to cool down also. Sometimes, a continuous flow of money is harmful for an economy,” he said.
So far, in April-November FY24, India has registered a gross FDI inflow of $47 billion, lower than $49 billion recorded in the same period of FY23. In the entirety of FY23, India had recorded gross FDI inflow of $71.3 billion, and in FY22, the gross inflows were $84.8 billion.
Despite high interest rates across the world, India didn’t see a drastic fall in the FDI inflows, as compared to its peer developing economies, because of the “demand strength” the country has and the opportunities it gives, Goyal said.
At the same event, Standard Chartered Bank Chief Executive Officer (CEO) Bill Winters said that in the past five-six years, the flow of capital from large businesses in India which historically had been focused on “investing out”, now focuses on “investing in”.
“Whether it’s power, petrochemicals, or infrastructure, the opportunities in India are greater than anywhere outside,” Winters said.
Winters, however, noted that India is a “relatively closed’’ economy. “The import-export flow in India, as a percentage of GDP, is relatively low.”
According to the World Bank, in 2022, India’s export to GDP ratio stood at 22.8%, higher than 20.7% of China, but lower than 28% of Russia and 40.2% of Saudi Arabia. All these countries are considered emerging market economies by the International Monetary Fund (IMF).
Winters further said that the export economy is not fully developed in India, and that will change with massive investments from Samsung, Apple and Foxconn. “We still hear from (multinational companies) that it’s still a little bit hard to do business in India.”
