India logs highest FDI inflow in 2020-21

INTERNATIONAL DESK: The Indian government told Parliament recently that the country registered its highest-ever annual Foreign Direct Investment (FDI) inflow of $81.97 billion in 2020-21. The government said these trends in India’s FDI are an endorsement of its status as a preferred investment destination amongst global investors.

This information was given by the Minister of State in the Ministry of Commerce and Industry Som Prakash in a written reply in the Rajya Sabha in response to a question posed by CPI (M) MP John Brittas and Loktantrik Janata Dal MP M. V. Shreyams Kumar.

The MPs from Kerala sought to know whether the government had taken any steps to bring global business into the country.

“Various initiatives/schemes have been launched by the government for promoting growth and attracting investment in India,” Prakash said in the written statement. He added that it is because of these initiatives that India jumped to 63rd place in World Bank’s Ease of Doing Business [EODB] ranking as per World Bank’s Doing Business Report (DBR) 2020 from a rank of 142 in 2014.

He said the Department for Promotion of Industry and Internal Trade (DPIIT), in consultation with the state governments, had started a comprehensive reform exercise in states and union territories under Business Reforms Action Plan (BRAP).

Under this plan, all states and union territories are ranked on the basis of reforms implemented by them on designated parameters. “This exercise has helped in improving business environment across states,” he said.

Among other steps taken by the government to attract investors, Prakash also listed an Empowered Group of Secretaries that had been constituted to fast track investments in the country and Project Development Cells (PDCs) have been set up to handhold investors and spur sectoral and economic growth.

A GIS-enabled India Industrial Land Bank has been launched to help investors identify their preferred location for investment. National Single Window System (NSWS) has also been soft launched in September 2021 to facilitate clearances for investors, he said.

In a major boost to its economy, India’s highest ever foreign direct investment (FDI) was up by 1.95 percent on-year, according to data released by the DPIIT. In terms of top investor countries of FDI Equity inflow, ‘Singapore’ is at the apex with 27 percent, followed by the US (18 percent) and Mauritius (16 percent) for the FY 2021-22.

Computer Software & Hardware has emerged as the top recipient sector of FDI Equity inflow during FY 2021-22 with around 25 percent share followed by services sector (12 percent) and automobile industry (12 percent) respectively.

The FDI inflow into the country in 2020-21 despite the COVID-induced pandemic was $81.97 billion. Total FDI includes equity capital of unincorporated bodies, reinvest earnings and other capital.

Further, India is rapidly emerging as a preferred country for foreign investments in the manufacturing sector. FDI Equity inflow in Manufacturing Sectors have increased by 76 percent in FY 2021-22 ($21.34 billion) compared to previous FY 2020-21 ($12.09 billion).

The FDI inflow has increased by 23 percent post-COVID (March, 2020 to March 2022: $171.84 billion) in comparison to FDI inflow reported pre-COVID (February, 2018 to February, 2020: $141.10 billion) in India.

Under the sector `Computer Software & Hardware’, the major recipient states of FDI Equity inflow are Karnataka (53 percent), Delhi (17 percent) and Maharashtra (17 percent) during FY 2021-22.

Karnataka is the top recipient state with 38 percent share of the total FDI Equity inflow reported during the FY 2021-22 followed by Maharashtra (26 percent) and Delhi (14 percent).

Majority of the equity inflow of Karnataka has been reported in the sectors ‘Computer Software & Hardware’ (35 percent), automobile industry (20 percent) and ‘Education’ (12 percent) during the FY 2021-22.

The steps taken by the government during the last eight years have borne fruit as is evident from the ever-increasing volumes of FDI inflow being received into the country, setting new records.

The government reviews the FDI policy on an ongoing basis and makes significant changes from time to time, to ensure that India remains attractive and investor friendly destination.

It has put in place a liberal and transparent policy for FDI, wherein most of the sectors are open to FDI under the automatic route. To further liberalize and simplify FDI policy for providing ease of doing business and attract investments, reforms have been undertaken recently across sectors such as Coal Mining, Contract Manufacturing, Digital Media, Single Brand Retail Trading, Civil Aviation, Defense, Insurance and Telecom.

(Agencies)