India's FDI inflows cross $1T mark, Mauritius tops investor list
What's the story
India has managed to draw more than $1 triilion in foreign direct investment (FDI) between April 2000 and September 2024.
This remarkable feat highlights the country's global position as a safe and primary investment destination.
According to the Department for Promotion of Industry and Internal Trade (DPIIT), the total FDI, comprising equity, reinvested earnings, and other capital, stood at $1.03 trillion during this period.
Major investors
Mauritius, Singapore, US: Leading contributors
Mauritius was the top contributor to India's FDI, contributing 25% of the total investment. It was followed by Singapore (24%) and US (10%).
Additionally, there were Netherlands (7%), Japan (6%), UK (5%), UAE (3%) and Cayman Islands, Germany and Cyprus with each contributing 2%.
India received $177.18 billion from Mauritius, $167.47 billion from Singapore and $67.8 billion from the US during this period.
Sectoral distribution
Services, software, telecom sectors attract most FDI
The services sector, computer software and hardware, telecommunications, trading, construction development, automobile, chemicals and pharmaceuticals were the key sectors that received these investments.
Between 2014-2024 alone, India attracted a cumulative FDI inflow of $667.4 billion. This is a 119% increase over the previous decade (2004-14) with investments across 31 states and 57 sectors.
Manufacturing boost
Manufacturing sector sees 69% rise in FDI equity inflows
The manufacturing sector saw a sharp rise in FDI equity inflows in the last decade (2014-24) at $165.1 billion.
This is a 69% increase over the previous decade (2004 -14) which saw inflows of $97.7 billion.
The government periodically reviews and updates its FDI policy to keep India attractive as an investor-friendly destination, after extensive consultations with stakeholders.
Future prospects
Experts predict continued FDI growth in India
Experts predict that overseas inflows into India will keep rising in 2025, buoyed by strong macroeconomic indicators, improved industrial output and attractive PLI schemes.
Avimukt Dar, Founding Partner at INDUSLAW, was optimistic about the future of FDI in India.
He said that "the inflows are likely to continue in a robust form," emphasizing the potential revival of private equity financing in the tech sector.
Economic impact
FDI is crucial for India's future
FDI is crucial for India's growth story, especially in the infrastructure sector. It ensures the balance of payments and Rupee's value are maintained.
FDI is permitted through the automatic route in most sectors, but foreign investors need government approval for investments in sectors like telecom, media, pharmaceuticals, and insurance.
Also, some sectors such as lottery, gambling and betting, chit funds, real estate business and manufacturing of cigars using tobacco are off-limits for FDI.