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India records highest-ever annual FDI inflow in FY 2021-22

India FDI Inflow 2021: India recorded the highest-ever annual FDI inflow of USD 83.57 billion in the Financial Year 2021-22, overtaking last year’s FDI by USD 1.60 billion. India’s FDI inflow has witnessed a 23 percent rise post-COVID-19 outbreak despite lockdowns and Russian military operations in Ukraine. 

India’s FDI inflows have increased by almost 20-fold since Financial Year 2003-2004 and almost doubled since FY 2014-15. India’s FDI inflow stood at just USD 45.15 billion in FY 2014-2015. 

India has been emerging as a preferred country for foreign investments in the manufacturing sector. Karnataka was the top FDI equity inflow recipient state in India, while the top FDI equity inflows were recorded from Singapore (27 percent) and the United States (18 percent).

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India’s FDI Inflow in FY 2021-22: Key Highlights

  • The FDI equity inflow in Manufacturing Sectors recorded a 76 percent increase in FY 2021-22 (USD 21.34 billion) in comparison to FY 2020-21 (USD 12.09 billion).
  • The Computer Software and Hardware sector was the top recipient of the FDI Equity inflow with a share of around 25 percent, followed by the Services Sector (12 percent) and the automobile sector (12 percent). 
  • Under the Computer Software and Hardware sector, the major recipient states during FY 2021-22 included Karnataka (53 percent), Delhi (17 percent) and Maharashtra (17 percent). 
    Overall, Karnataka was the top recipient of the FDI equity inflow with a share of 38 percent during the FY 2021-22 followed by Maharashtra (26%) and Delhi (14%). 
  • A majority of FDI inflow in Karnataka was reported in `Computer Software & Hardware’ (35%), Automobile Industry (20%) and `Education’ (12%) sectors. 
  • Singapore was the top investor country with a share of 27 percent in FY 2021-22, followed by the US (18 percent) and then Mauritius (16 percent).

India FDI Inflow in last 4 financial years:

S. No.

Financial Year

Amount of FDI inflows

(in USD billion)

1.

2018-19

62.00

2.

2019-20

74.39

3.

2020-21

81.97

4.

2021-22

83.57

Source: PIB

Why is India attracting high FDI inflow?

India is witnessing ever-increasing volumes of FDI equity inflow due to the steps taken by the Government during the last couple of years. The centre reviews the FDI policy on an ongoing basis and makes required changes from time to time, to ensure India remains an investor-friendly destination.

The Indian Government has also put in place a liberal and transparent FDI policy, wherein most of the sectors are open to FDI under the automatic route. 

The government has also undertaken reforms across sectors including contract manufacturing, coal, defence, digital media, insurance and telecom, and single-brand retail trading to further liberalise and simplify FDI policy to enable Ease of doing business. 

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