Year Ender 2023-FDI in India: Foreign direct investment (FDI) in India is likely to gain momentum in 2024. Due to better macroeconomic data and increase in industrial production, attractive PLI scheme will attract more foreign companies to India. India remains a preferred investment destination amid geopolitical constraints and tightening interest rates globally. Department for Promotion of Industry and Internal Trade (DPIIT) Secretary Rajesh Kumar Singh said the government constantly reviews the FDI policy and changes are made from time to time after extensive consultation with stakeholders. During January-September this year, FDI inflow into the country declined by 22 percent to $48.98 billion. In the same period a year ago, this figure was 62.66 billion US dollars. Rajesh Kumar Singh said that in the period 2014-23, FDI inflow has been about 596 billion dollars, which is almost double the FDI received by India during 2005-14. He said that these trends of FDI are positive and India still remains a favorite destination for foreign companies. Production linked incentive (PLI) schemes for sectors like pharmaceuticals, food processing and medical devices have started yielding results and FDI has increased in many of these sectors.
What is the reason for decline in FDI this year?
Rajesh Kumar, Secretary, Department for Promotion of Industry and Internal Trade (DPIIT), said that one reason for the decline in FDI this year could be the acceleration in the real GDP growth rate of Singapore, US and UK, as these countries are the major sources of FDI in India. . Rumki Majumdar, economist at consulting firm Deloitte India, said the slowdown in capital inflows was due to tightening of global liquidity and geopolitical uncertainties. He said that however, the world will soon recognize the strength of India’s fundamentals and capital inflows will increase. Anindya Ghosh, partner at legal advisory firm IndusLaw, said India can take some solace from the fact that it is not the only country to have been hit by the recent economic slowdown. He said that there are a lot of concerns about the recent decline in FDI in India, but the figures show that there may be a slight increase in FDI inflows next year.
What is foreign direct investment
Foreign Direct Investment (FDI) is a system in which an individual, organization, or independent country invests in another country, thereby acquiring a stake in a business or enterprise there. This investment may include other sectors of that country, such as enterprises, stock markets, financial services, and other assets. A person or organization investing in FDI must follow various restrictions, rules, and legal procedures of that country while investing outside a country. The main objectives of FDI may include accessing foreign markets, acquiring new technology and knowledge, making or providing foreign goods, and entering the local market by partnering with foreign entrepreneurs. Examples of FDI are a foreign company opening a new branch in a country or buying a stake in a local company. Through this, foreign investors can especially have a positive impact on the economy of that country, but it can also affect the local economy.
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