India attracts highest-ever FDI inflow in FY21

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SME Times News Bureau | 24 May, 2021
Beating the pandemic blues, India attracted the highest level of foreign direct investment (FDI) in financial year 2020-21, even surpassing the previous year's numbers by a healthy 10 per cent, an official statement said on Monday.

The country attracted total FDI inflow of $81.72 billion in FY21, 10 per cent higher as compared to the last financial year 2019-20 at $74.39 billion, it said.

Measures taken by the government on the fronts of FDI policy reforms, investment facilitation and ease of doing business have resulted in increased FDI inflows into the country, the Commerce Ministry statement said.

The following trends in India's FDI are an endorsement of its status as a preferred investment destination amongst global investors, the statement added.

What is encouraging is that out of the total inflows, FDI equity inflow grew by 19 per cent last year ($59.64 billion) compared to the previous year ($49.98 billion). Equity inflows or fresh foreign capital flows into the economy shows investor confidence on the state of the economy and helps the country to build new capacities.

As per the government data, Singapore remained the the top investor in the country in FY21 with 29 per cent of total inflows, followed by the US (23 per cent) and Mauritius (9 per cent). In previous few years, Mauritius has lost the numero uno destination for investment into India after the country signed a fresh investment treaty with India that puts a check on pseudo investors using the route to save on taxes.

'Computer Software & Hardware' has emerged as the top sector during FY 2020-21 with around 44 per cent share of the total FDI Equity inflow followed by Construction (Infrastructure) Activities (13 per cent) and Services Sector (8 per cent) respectively.

Under the sector 'Computer Software & Hardware', the major recipient states are Gujarat (78 per cent), Karnataka (9 per cent) and Delhi (5 per cent) in FY 2020-21.

Gujarat is the top recipient state during FY 2020-21 with 37 per cent share of the total FDI Equity inflows followed by Maharashtra (27 per cent) and Karnataka (13 per cent).

Majority of the equity inflow of Gujarat has been reported in the sectors - 'Computer Software & Hardware' (94 per cent) and 'Construction (Infrastructure) Activities' (2 per cent) during FY 2020-21.

The major sectors, namely Construction (Infrastructure) Activities, Computer Software & Hardware, Rubber Goods, Retail Trading, Drugs & Pharmaceuticals and Electrical Equipment have recorded more than 100 per cent jump in equity during FY 2020-21 as compared to the previous year.

Out of top 10 countries, Saudi Arabia is the top investor in terms of percentage increase during FY 2020-21. It invested $2,816.08 million in comparison to US$ 89.93 million reported in the previous financial year.

About 227 per cent and 4 per cent increase was recorded in FDI equity inflow from the US and the UK respectively, during FY 2020-21 compared to FY 2019-20, the government data showed.