Net foreign direct investment (FDI) into India experienced a notable decrease of 62.17% in the fiscal year 2023-24 (FY24), plummeting to $10.58 billion from the previous year’s $27.98 billion. This decline is attributed primarily to increased repatriation of capital and Indian companies’ investments abroad.
Decline in Net FDI
In FY24, net FDI flows saw a sharp decline, reaching the lowest level since 2007, totaling $10.58 billion compared to $27.98 billion in the previous fiscal year. This decline was primarily due to higher repatriation of capital and increased investments by Indian companies overseas.
Repatriation and Outward FDI
Out of the $70.9 billion gross FDI flows into the country, $44.4 billion was repatriated through dividends, share sales, or disinvestment, while another $15.96 billion was invested overseas by Indian entities. In comparison, FY23 witnessed gross FDI flows of $71.3 billion, with $29.3 billion repatriated and $14 billion invested outwardly.
FDI Sector Allocation
More than 60% of FDI equity flows were directed towards sectors like manufacturing, electricity, computer services, financial services, and retail and wholesale trade. The majority of these flows were sourced from Singapore, Mauritius, the US, the Netherlands, Japan, and the UAE.
Global FDI Trends
Global FDI flows have been influenced by factors such as higher borrowing costs, geopolitical fragmentation, and increased protectionism. Despite these challenges, India remains among the top 10 economies projected to experience significant FDI momentum in 2024. There has been a notable shift in global investment patterns, with FDI flows moving from developed to developing economies, showcasing a structural change accelerated by the COVID-19 pandemic.
Indian Outward FDI
Indian companies announced over 550 greenfield FDI projects abroad, marking the highest number in any year thus far. This indicates a growing trend of Indian firms expanding their global footprint through strategic investments overseas.