India receives record FDI in 2020-21, Singapore top investor in equity inflows

According to the latest official data, India received a record foreign direct investment of $81.72 billion during the last fiscal, an increase of 10% over the FDI inflows received during 2019-20, writes Krishnanand Tripathi.

New Delhi: Despite the Covid-19 pandemic that disrupted supply chains and affected economic activity worldwide, India received a record foreign direct investment (FDI) of $81.72 billion, including reinvestments, during the last fiscal, an increase of 10% over the FDI inflows received during the previous fiscal, showed the latest official data.

According to the data shared by the ministry of commerce and industries, the FDI inflows in FY 2019-20 have been estimated at $74.39 billion.

In case of the FDI equity inflows, which is a direct investment in an Indian entity by foreign investors, the growth rate was even better, as the country received $59.64 billion in the last fiscal in comparison with the amount of $49.98 billion received in 2019-20, an increase of 19%.

The government said the trends in India’s Foreign Direct Investment (FDI) are an endorsement of its status as a preferred investment destination amongst global investors.

“Measures taken by the Government on the fronts of Foreign Direct Investment (FDI) policy reforms, investment facilitation and ease of doing business have resulted in increased FDI inflows into the country,” the government added.

Singapore biggest investor in equities

In terms of top investor countries for FDI equity inflows, Singapore tops the list with 29% shares, followed by the USA (23%) and Mauritius (9%) during the last fiscal.

If one looks at the data sector wise then the ‘Computer Software and Hardware’ sector has emerged as the top sector with around 44% share of the total FDI Equity inflows, followed by Construction (Infrastructure) Activities (13%) and Services Sector (8%).

Under the sector ‘Computer Software and Hardware’, Gujarat received the lion’s share (78%), followed by Karnataka (9%), which is home of the country’s IT capital Bengaluru and national capital Delhi (5%).

Gujarat was also the top recipient state in the last fiscal with 37% share of the total FDI Equity inflows. It was followed by Maharashtra (27%) and Karnataka (13%).

Majority of the equity inflows of Gujarat has been reported in the sectors ‘Computer Software & Hardware’ (94%) and ‘Construction (Infrastructure) Activities’ (2%) in the last fiscal.

More than 100% jump in some sectors

India tops the list of the worst hit countries among the major economies as the GDP is expected to decline by over 8% in the last fiscal. Despite that the country was able to attract foreign investors as it registered more than 100% growth in FDI equity inflows in some sectors.

Sectors such as Construction (Infrastructure) Activities, Computer Software and Hardware, Rubber Goods, Retail Trading, Drugs and Pharmaceuticals and Electrical Equipment have recorded more than 100% jump in equity in the last fiscal 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. The world’s largest oil producer invested $ 2816.08 million in India in comparison with an investment of just $89.93 million during FY 2019-20.

Advanced economies such as the US and UK also continued to invest heavily in the country during the previous fiscal. The FDI equity inflows from the US recorded a growth of 227% while the equity inflows from the UK jumped by 44% in the last fiscal.