FDI equity inflows fall 24% YoY in Q2

New Delhi: Foreign direct investment (FDI) equity inflows into India fell nearly a quarter to $10.3 billion in the September quarter from $13.6 billion a year earlier, data released by the Department for Promotion of Industry and Internal Trade (DPIIT) showed.

Sequentially, inflows were down 37% from June quarter, as global uncertainty dampened appetite for investments. Total FDI inflows - including fresh FDI equity inflows, reinvested earnings and other capital - contracted 16% to $16.6 billion in Q2 from $19.8 billion a year ago.

Globally, FDI inflows rebounded in 2021 from pandemic lows but turned tepid in 2022 following the start of the Russia-Ukraine war and the high inflation-triggered tight monetary policies in FDI source countries. "Investor uncertainty and risk aversity could put significant downward pressure on global FDI this year," the United Nations Conference on Trade and Development (Unctad) warned in its flagship World Investment Report in June.

Down 14% in H1, FY23
In the first half of FY23, FDI equity inflows shrank 14% to $26.91 billion from $31.5 billion a year earlier while total inflows were 8.8% lower at $39.09 billion in the April-September period from $42.86 billion in the year earlier.

During the first half of this fiscal year, Singapore emerged as the top investor with $10 billion FDI, followed by Mauritius ($3.32 billion), UAE ($2.95 billion) and the US ($2.6 billion). As per the data, tax havens such as the Cayman Islands and Cyprus were among the top 10 sources of overseas investments for India.

Among sectors, the computer software and hardware sector attracted the highest inflows of $6.28 billion during the six-month period followed by services at $4.16 billion.

July saw the highest FDI at $4.97 billion in the quarter. Among states, Maharashtra was the top FDI destination followed by Karnataka and Gujarat. FDI equity inflows into India contracted marginally to $58.8 billion in FY22 from $59.6 billion in FY21.As per the Unctad report, India had moved a notch higher to the seventh rank among the top 20 host economies for 2021 in terms of FDI inflows.