Singapore and the US have emerged as the top two sourcing countries in Foreign Direct Investment (FDI) equity flows into India in the financial year 2021-22, according to the Union government.
In a statement on Thursday (July 28), the Ministry of Commerce and Industry said that Singapore (27.01%), USA (17.94%), Mauritius (15.98%), The Netherlands (7.86%) and Switzerland (7.31%) were the top five nations in FDI equity flows into country in FY2021-22.
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As per the UNCTAD (United Nations Conference on Trade and Development) World Investment Report (WIR) 2022, in its analysis of the global trends in FDI inflows, India has improved one position to seventh rank among the top 20 host economies for 2021, the ministry said.
FDI inflows of $84,835 mn in FY 21-22
“India is rapidly emerging as a preferred country for foreign investments in the manufacturing sector. FDI equity inflow in manufacturing sectors have increased by 76% in FY 2021-22 ($21.34 billion) compared to previous FY 2020-21 ($12.09 billion),” the ministry added.
According to the ministry, “The government has implemented several transformative reforms under the FDI policy regime across sectors such as insurance, defence, telecom, financial services, pharmaceuticals, retail trading, e-commerce, construction & development, civil aviation, manufacturing etc.”
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Despite the ongoing pandemic and global developments, the ministry said, India received the highest annual FDI inflows of $84,835 million in FY 21-22 overtaking last year’s FDI by $2.87 billion. Earlier, FDI inflows increased from $74,391 million in FY 19-20 to $81,973 million in FY 20-21.
“The government continues to liberalise investment restrictions, eliminate regulatory barriers, nurture international relations and improve business environment. Changes are made in the FDI policy after having consultations with stakeholders including apex industry chambers, associations, representatives of industries/groups and other organisations. While foreign investments are permitted under the automatic route in most sectors/activities, due to strategic reasons certain investments are either restricted or permitted under the Government approval route through a screening mechanism as per the prescribed framework,” the ministry said.
The top five sectors receiving highest FDI equity inflow during FY 2021-22 are computer software and hardware (24.60%), services sector (finance, banking, insurance, non-finance/business, outsourcing, R&D, courier, tech testing and analysis, others) (12.13%), automobile industry (11.89%), trading (7.72%) and construction (infrastructure) activities (5.52%).
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Top 5 states
The top five states receiving the highest FDI equity inflow during FY 2021-22 are Karnataka (37.55%), Maharashtra (26.26%), Delhi (13.93%), Tamil Nadu (5.10%) and Haryana (4.76%).
During FY 2021-22, FDI has been reported from 101 countries, whereas, it was reported from 97 countries during the previous FY 2020-21.
In India, FDI up to 100% is allowed in non-critical sectors through the automatic route, not requiring security clearance from the Ministry of Home Affairs (MHA). Prior government approval or security clearance from MHA is required for investments in sensitive sectors such as defence, media, telecommunication, satellites, private security agencies, civil aviation and mining, besides any investment from Pakistan and Bangladesh.
All foreign investments are required to be in compliance with the applicable entry route, sectoral cap, attendant conditions, sectoral laws, Companies Act, 2013 and rules thereunder, pricing guidelines, documentation and reporting requirements.