Foreign Direct Investments mean investing in another country’s business interest by a company or an individual investor from a different country. It improves a nation’s economic standing. It creates jobs and improves infrastructure. It creates diversification for investors and access to global markets.
But at the moment, FDI is declining in India. There was a 24% overall decline from April to September FY24, according to reports. There is a 34% reduction in the first quarter and a 7.8% decline in the second.
Decrease in Investment estimates
FDI inflows fall off steadily in the states of India.FDI equity inflow declined from Singapore, Mauritius, the US, the UK, and the United Arab Emirates (UAE) during the first six months of FY24. Similarly, investments from the Cayman Islands and Cyprus decreased from $582 million and $764 million, respectively to $145 million and $35 million. Contrarily, investments from the Netherlands, Japan, and Germany have been boosted.
FDI inflows in different Indian States
FDI inflows fall off steadily in the states of India. Maharashtra’s inflow fell from $8 billion to $7.9 billion from April to September. For Karnataka inflow falls from $5.3 billion to $2.8 billion. Gujrat and Delhi face a decline of 77% and 1.9% respectively for quarter 1 of FY24.
On the contrary, Telangana, Jharkhand and West Bengal have escalated the FDI inflows.
Different Sectors Affecting Investment Decisions
Computer software and hardware, trade, services, telecommunications, automobile, pharma and chemicals are the major sectors where a decline in FDI inflow is noticed. One of the reasons would be an increase in interest rates globally and increasing global disputes. Domestic economic conditions, currency fluctuations, and changes in tax policies impact the appeal of investment decisions for India.
Means to initiate FDI in India
India has come forward with some initiatives to attract investment decisions.
- Reducing restrictions on FDI to charm more investors
- Special tax initiatives and simplification of GST have been introduced.
- The limit for FDI has been increased to 74% in the defence sector.
- Corporate tax reductions and simplified labour laws.
Resources
https://timesofindia.indiatimes.com/business/india-business/fdi-inflows-fall-34-to-11-billion-in-june-quarter-as-mncs-go-slow/articleshow/103114388.cms?from=mdr
https://economictimes.indiatimes.com/news/economy/finance/fdi-shrinks-7-8-in-second-quarter-of-fy24/articleshow/105391847.cms
https://utkarsh.com/current-affairs/fdi-equity-inflows-decline-24-to-usd-20-48-billion-in-apr-sep-2023https://currentaffairs.adda247.com/decline-in-fdi-inflows-from-cayman-islands-and-cyprus-to-india/
https://dpiit.gov.in/sites/default/files/FDI_Factsheet_September_2023.pdf
