In the fiscal year 2021-22, India has recorded the largest annual Foreign Direct Investment (FDI) inflow of USD 83.57 billion. In 2014-2015, India received 45.15 billion USD in FDI, compared to the highest ever annual FDI inflow of USD 83.57 billion reported for the fiscal year 2021-22, surpassing the previous year’s FDI by USD 1.60 billion.
Since FY03-04, when inflows were barely USD 4.3 billion, India’s FDI inflows have surged 20-fold. It demonstrates that India is growing as a desirable destination for international investment in a variety of areas.
The growth is particularly remarkable, given that it has come against the backdrop of global uncertainty and a pandemic-wracked world as the emergence of the coronavirus outbreak had rendered economies shut and chipped away at investor confidence.
In addition, India is quickly becoming a popular destination for international investment in the industrial sector. When compared to the previous fiscal year, FDI equity inflows into the manufacturing sector surged by 76% in FY 2021-22 (USD 21.34 billion) (USD 12.09 billion). In India, FDI inflows have grown by 23% post-Covid (March 2020 to March 2022: USD 171.84 billion) compared to pre-Covid (February 2018 to February 2020: USD 141.10 billion).
Computer Software & Hardware has emerged as the leading recipient sector of FDI Equity inflows for FY 2021-22, accounting for around 25% of total inflows, followed by the Services Sector (12%) and the Automobile Industry (12%), respectively. For the fiscal year 2021-22, Singapore ranks first with 27 per cent of FDI equity inflows, followed by the United States (18 per cent) and Mauritius (16 per cent).
Karnataka is the leading beneficiary state, accounting for 38 per cent of total FDI equity inflows recorded for the fiscal year 2021-22, followed by Maharashtra (26 per cent) and Delhi (14 per cent). During the fiscal year 2021-22, the majority of Karnataka’s equity inflows were recorded in the sectors of Computer Software & Hardware (35 per cent), Automotive Industry (20 per cent), and Education (12 per cent).
The reforms implemented by the government over the previous eight years have shown fruit, as seen by the rising amounts of FDI inflows into the nation, which are establishing new records. The government has implemented a liberal and transparent FDI policy, with most industries available to FDI under the automatic route. Reforms have recently been implemented in sectors such as coal mining, contract manufacturing, digital media, single-brand retail trading, civil aviation, defence, insurance, and telecommunications to further liberalise and simplify FDI policy in order to provide ease of doing business and attract investments.
India can become a $5 trillion economy by 2026-27
The International Monetary Fund (IMF), which forecasted in April that India will not reach $5 trillion in GDP until 2028-2029, has revised its projection in the World Economic Outlook database. According to the most recent IMF estimate, India will attain its $5 trillion economic objectives by 2026-2027, two years earlier than previously expected.
According to Swarajya, the shift in projection is due to the assumption that the rupee will fall to 84 versus the US dollar rather than 94. The International Monetary Fund did not examine the Indian economy’s growth in nominal or real terms and instead focused on the dollar-rupee exchange rate.
