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Glimmers of hope: India’s FDI at an all-time peak

FDI

In the midst of India continuing to put up a brave fight against the frightening second wave of the coronavirus, India’s economy has yet again demonstrated its inherent strength and resilience on the face of adversity. Despite the crisis induced by the ongoing pandemic, India’s net foreign direct investment (FDI) inflows have touched a record high, reaching as high as $43.36 bn in the financial year ended March 2021. 

Apart from the direct investments, foreign portfolio investments (FPI) too, has shown an upward trajectory in the Indian context. In FY21, total FPI inflows in debt and equities stood at $36.18 bn, lower only to the 2014-15 FPI inflows. On the back of these surging investment flows, the foreign exchange reserves of the country have also jumped up by a margin of over $100 bn, standing at $576.8 bn on the week ending on 2 April 2021. 

A deeper analysis of the FDI inflows reveals that 90% of it was concentrated in four states Maharashtra, Gujarat, Karnataka, and Delhi-NCR mainly in sectors like IT, pharmaceuticals, telecom, and digital economy. With the Indian government launching Production-Linked Incentives (PLI) schemes to incentivize and promote manufacturing in major sectors of the economy, the high levels of inward investments complement the government’s efforts to rejuvenate the economy.  

These investments are significant in the backdrop of the large-scale economic and social disruption caused by the Covid-19 pandemic since last year and come as an assuring reminder that both, the fundamentals of the Indian economy and global trust in the Indian market, remain strong.