Manufacturing sector records lowest FDI inflows in five years: data

New Delhi: In FY2024, the manufacturing sector saw the lowest foreign direct investment (FDI) inflow in five years, i.e. The new Indian coffee machine it said, citing provisional FDI data published in the RBI’s annual report.

The manufacturing sectors received $9.3 billion in FDI in FY24, which is 17.7% less than the inflow of $11.3 billion in FY23. The newspaper reported that in FY22, the manufacturing sector received $16.3 billion FDI dollars.

The report noted that the decline in financial services was much more pronounced, with FDI inflows amounting to just $4.4 billion, down 35% from the previous year.

Overall, foreign direct capital investment in India declined to a five-year low of $44.42 billion in FY24, mainly due to high interest rates in advanced economies and limited absorption capacity of sectors, Business standard it said, citing data published by the Department for the Promotion of Industry and Internal Trade. In FY23 it was $46 billion.

According to the data, this means a decline of 3.5% year on year.

Singapore remained the largest source of FDI to India in FY24, contributing $11.8 billion, although this was $5.4 billion less than the previous year.

FDI inflows from Mauritius increased by 31% in FY24, reaching $8 billion. This increase comes after a new tax treaty with Mauritius came into force on April 1, 2017, which eliminated several tax benefits and prompted investors to shift their base to Singapore to funnel FDI to India, The new Indian coffee machine he said.

The United States and the Netherlands were also major donors, contributing $5 billion and $4.9 billion, respectively. FDI inflows from Japan increased from $1.8 billion in FY23 to $3.2 billion in FY24. Meanwhile, the UAE’s contribution declined from $3.4 billion in FY23 to $2.9 billion in FY23. financial 24.

The Narendra Modi-led government is pushing the narrative that India is the fastest growing economy. While there has been an overall decline in FDI flows across the world, India has not bucked the trend. India’s share in the global FDI inflow is also decreasing.

Many global analysts have expressed concern about the unprecedented decline in net FDI inflows in 2022-2023, as reported Wires MK Venu.

Despite considerable media hype and government efforts to attract FDI for chip production, the results have been disappointing. For start-ups, FDI is also coming to an end.

Gross FDI into India in the first half (April-September) of FY23 was just $10.1 billion – the lowest level in 16 years, Printing house TCA Sharad Raghavan reported in January 2024.

Analysts attribute the decline to the Modi government’s policies. “Despite India’s improvement in the World Bank’s Ease of Doing Business Index, actually doing business in India remains a difficult process, further hampered by bureaucracy,” the report noted.