Data from the Department for Promotion of Industry and Internal Trade (DPIIT) revealed that the total Foreign Direct Investment (FDI), encompassing equity, reinvested earnings, and other capital, amounted to USD 1,033.40 billion between April 2000 and September 2024.
SOURCE OF THE FDI
So, where did all this investment come from? Which countries were the main contributors to these inflows? One might expect the US, being the largest global economy, or China, the second-largest, to take the top spot, but surprisingly, it’s neither of them.
The leading contributor to India’s FDI during this period was Mauritius, accounting for a substantial 25% of all FDI inflows. Mauritius was closely followed by Singapore, which contributed 24%. The United States ranked third with 10%.
Other significant investors included The Netherlands (7%), Japan (6%), the UK (5%), and the UAE (3%). The Cayman Islands, Germany, and Cyprus each contributed 2%.
SECTORS THAT ATTRACTED MAJOR INVESTMENTS
The sector receiving the most investment was services and allied industries. Notable investments were seen in areas such as computer software and hardware, telecommunications, trading, construction, infrastructure development, automobiles, chemicals, and pharmaceuticals.
RISING FDI INFLOWS
Out of the total $1,033 billion, $667.4 billion was invested in the last decade (2014-2024), marking a 119% increase in comparison to the previous decade. The data also shows that FDI has flowed into nearly 60 sectors across 31 states and union territories in India.
To further boost investment, India has adopted liberal and attractive investment policies. Reforms have allowed 100% FDI under the automatic route in most sectors, except those deemed of strategic importance.
The manufacturing sector has particularly benefitted from this liberalization, with FDI increasing by 69% in the last decade compared to the prior one, in line with the ‘Make in India’ initiative.
SECTORS OPEN TO FDI AND PROCEDURE
FDI is allowed through the automatic route in most sectors. However, for certain sectors like telecom, media, pharmaceuticals, and insurance, foreign investors must obtain government approval.
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Under the government approval route, a foreign investor must receive prior approval from the relevant ministry or department. Meanwhile, under the automatic route, the investor only needs to inform the Reserve Bank of India (RBI) after making the investment.
Some sectors, however, are prohibited from receiving FDI, including lottery, gambling and betting, chit funds, Nidhi companies, real estate business, and the manufacturing of cigars, cheroots, cigarillos, and cigarettes using tobacco.
