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India's global FDI share drops to 2.1% in 2023
Industry News- Sep 02,24
Nearly 49.5% of FDI during October 2019–March 2024 went to Maharashtra and Gujarat, 30.3% to the Karnataka-Tamil Nadu-Andhra-Telangana region, and the remaining 17.8% to Delhi and Haryana.
Despite various government initiatives aimed at boosting foreign direct investment (FDI)—including the national manufacturing policy and production-linked incentives—India's share of global FDI has plummeted to 2.1% in 2023, down from 6.5% in 2020. This drop has also caused India’s global FDI ranking to fall to 16th place from 8th in 2022.
The UN Trade and Development's World Investment Report 2024 highlights this decline, noting that while FDI inflows have risen significantly from $2.1 billion in 1995 to $28.2 billion in 2023, their distribution remains uneven. Nearly 49.5% of FDI during October 2019–March 2024 went to Maharashtra and Gujarat, 30.3% to the Karnataka-Tamil Nadu-Andhra-Telangana region, and the remaining 17.8% to Delhi and Haryana.
The report reveals that the highest share of FDI is directed towards the services sector, particularly banking/insurance, trading, and telecommunications. The proportion of FDI inflows into services increased from 37% during FY01-FY14 to 40.9% during FY15-FY24. Conversely, FDI in manufacturing—excluding computer hardware—has been concentrated in automobiles, chemicals, drugs and pharmaceuticals, metallurgical, electrical equipment, and food processing.
The concentration of FDI in a few states suggests that strong infrastructure and growth potential are crucial for attracting investment. States that have aligned their economic policies with national objectives have been more successful in drawing FDI, according to Devendra Kumar Pant, Chief Economist at the agency.
Despite the government's goal to increase manufacturing’s contribution to GDP to 25%, FDI in this sector remains limited. A robust manufacturing sector is essential for stable growth and job creation, as noted by Paras Jasrai, Senior Analyst with the agency.
(TNIE)
FDI
foreign investment
economy
Devendra Kumar Pant
Paras Jasrai
global FDI
UN Trade and Development's World Investment Report
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