Foreign direct investment (FDI) in India surged 47.8% to USD 16.17 billion during the April-June 2024 quarter, marking a notable increase from the same period last year, according to experts.
The growth is attributed to several factors, including expectations of a potential Federal Reserve rate cut, a modest growth outlook in the US, and India’s favourable economic conditions.
Rumki Majumdar, an economist at Deloitte India, highlighted that FDI destinations have evolved over the past decade. Sectors such as power, construction, healthcare, chemicals, and non-conventional energy have become increasingly attractive.
She anticipates that this trend will continue, with global investors likely to be drawn to India by the anticipated US election results and economic policies.
Aakash Dasgupta, a partner at IndusLaw, noted that while FDI inflows have significantly increased compared to the first quarter of the previous financial year, it is essential to consider that FDI was relatively low during Q1 of FY23.
The current inflows, though impressive, are closer to historical levels seen before the previous year. Dasgupta attributed the increase to several factors, including investment pressures on foreign institutional investors, strong performance in Indian capital markets, and favourable amendments to FDI policy.
Government data shows that FDI inflows reached USD 5.85 billion in May and USD 5.41 billion in June, compared to USD 2.67 billion and USD 3.16 billion in the same months the previous year.
April’s FDI inflows were slightly down at USD 4.91 billion, compared to USD 5.1 billion in April 2023.
Overall, total FDI, encompassing equity inflows, reinvested earnings, and other capital, grew 28% to USD 22.49 billion in the first quarter of this fiscal year from USD 17.56 billion in April-June 2023-24.
Significant increases in FDI equity inflows were observed from major countries including Mauritius, Singapore, the US, the Netherlands, the UAE, Cayman Islands, and Cyprus.
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