Foreign Direct Investment inflow into India came down by 26% in the year 2021, according to UN Conference on Trade and Development (UNCTAD). The Investment Trends Monitor report published by UNCTAD on Wednesday said that the decline in FDI inflow was largely due to the absence of any large M&A deal like the last year.
The report says that the second wave of Covid-19 had a major impact on overall economic activities in India, including FDI inflows.
However, the report of 26% decline in FDI inflow can be misleading, as it is based on calendar year (January to December) data, while India uses the April-March period as the financial year. And according to the latest data by the govt, there has not been much decline in FDI inflow to the country so far.
While UNCTAD’s Investment Trends Monitor says FDI inflow into India declined by 26% in 2021, the official figures for the financial year 2021-22 will come out only after March 2022. The figures will be different, because of the difference in financial years used.
According to govt of India data, FDI inflows in the first six months of FY 2021-22 was $42.9 billion. And reportedly, the figure had reached $48.5 billion by October. This amount is similar to the amount for the period April-October 2020, therefore, it can be expected that the amount will not come down much, and can in fact go up if some major deals take place in the next two months. The total FDI inflow in the previous year was $82 billion, and with $48.5 billion already reached by October, it can be reasonably expected that the inflow will not come down, and can go up.
Moreover, sources in the union govt say that FDI has not come down. Govt also denied the suggestion that no large deal took place in the year, saying that a record number of deals were signed in the current financial year. Therefore, the govt expresses confidence that FDI inflow to the country will remain on track.
Total FDI inflow to India has been rising every year since 2014, which had witnessed a dip in 2013. In fact, the inflow has gone up by 128% from 2014 to 2021, which means FDI into the country has more than doubled in the first seven years of Modi government.
| Financial Year | Total FDI Inflow (US $ Billion) |
|---|---|
| 2011-12 | 46.6 |
| 2012-13 | 34.3 |
| 2013-14 | 36.0 |
| 2014-15 | 45.1 |
| 2015-16 | 55.6 |
| 2016-17 | 60.2 |
| 2017-18 | 61.0 |
| 2018-19 | 62.0 |
| 2019-20 | 74.4 |
| 2020-21 | 82.0 |
| 2021-22 (Upto September 2021) | 42.9 |
The total FDI inflow in 2014 was $36 billion, which had reached $82 billion by 2021. The amount was $46.6 billion in 2012, which had come down to $34.3 billion in 2013. The figure has been continuously rising every year after 2014, showing increasing confidence of global businesses in India.
Maharashtra, Gujarat and Karnataka remain the top three recipients of FDI into the country.
