Foreign direct equity investments declined by 24 per cent to $20.5 billion during the first six months of the financial year 2023-24, data released by the industry department showed.
While the government did not officially cite any reason for a sustained contraction in FDI inflows, the decline comes against the backdrop of uncertainties and challenges in the global economy.
Foreign direct equity investments declined by over a fifth to $46.03 billion during the previous financial year. Investments from overseas continued to fall even in April, May, June, July, and August.
However, in September, there was some improvement as investments rose to $4.08 billion compared to $2.97 billion in the same month last year.
Total FDI, which includes equity capital of unincorporated bodies, reinvest earnings, and other capital, contracted 15.5 per cent to $32.9 billion during the period under review, Department for Promotion of Industry and Internal Trade (DPIIT) data showed.
During the six months of this fiscal, FDI equity inflows decreased from major countries, including Singapore, Mauritius, the United States, the United Kingdom, and the United Arab Emirates.
Investments fell significantly from the Cayman Islands and Cyprus to $145 million and $35 million, respectively, during April-September as against $582 million and $764 million in the year-ago period.
Inflows increased from the Netherlands, Japan, and Germany.
Singapore emerged as the top investor with $5.22 billion FDI during April-September. This was followed by investment from countries such as Mauritius ($2.95 billion), Japan ($2.09 billion), the United States ($2.05 billion), the Netherlands ($1.92 billion), the United Arab Emirates ($1.19 billion), the United Kingdom ($638 million), Cyprus ($35 million), the Cayman Islands ($772 million), and Germany ($238 million), among the top 10 investing countries’ FDI equity inflows.
As far as sectors are concerned, inflows contracted in computer software and hardware, trading, services, telecommunication, automobile, pharma, and chemicals. However, construction (infrastructure) activities, construction development, and the metallurgical industry registered growth in inflows.
With respect to states, though Maharashtra received the highest inflow of $7.95 billion during the period, it was lower compared to $8 billion inflows during the same period last year.
Similarly, overseas inflows in Karnataka plunged to $2.84 billion in April-September from $5.32 billion in the same period last year. Other states/UTs where FDI declined include Gujarat, Rajasthan, Delhi, Tamil Nadu, and Haryana.