During the first half of the current fiscal year, foreign direct investment (FDI) in India grew by 15 percent to $30 billion, according to official statistics. According to the Department for the Promotion of Industry and Internal Trade details, the inflow of foreign direct investment during April-September 2019-20 stood at $26 billion. By July, the country had drawn foreign investment worth $17.5 billion.
Computer software and hardware ($17.55 billion), services ($2.25 billion), trading ($949 billion), chemicals ($437 million), and cars ($417 million) were sectors that received maximum foreign inflows during April-September 2020-21.
With investments of $8.3 billion, Singapore emerged as India’s largest source of foreign direct investment during the time. The U.S., the Cayman Islands, Mauritius, the Netherlands, the UK, France, and Japan followed.
What is FDI?
Foreign direct investment is when a corporation in another country assumes control of ownership of a business enterprise. With FDI, international corporations are actively active in other country’s day-to-day operations. This means that they not only bring capital but also experience, skills, and technology with them.
Foreign direct investment takes place when an investor sets up foreign business operations or acquires foreign business properties, including the establishment of a foreign company’s ownership or control of interest.
Foreign Direct Investments are typically made in open economies with skilled labour and opportunities for development. Not only do FDIs bring with them capital, but also skills, technology, and knowledge.
For India’s economic growth, FDI is a significant monetary source. In the aftermath of the 1991 crisis, economic liberalization began in India and FDI has gradually increased in the country since then. India is now part of the Ease of Doing Business (EoDB) Top 100 club and ranks number 1 globally.