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FDI into India up from $45 billion to $61 billion in 4 years, but rate of growth is slowing down

Mudit Kapoor     December 17, 2018

The Foreign Direct investment (FDI) has displayed increase in absolute numbers from $45.15 billion in FY15 to $60.97 in FY18 but the rate of growth in FDI inflows is falling consecutively since the last two years. Recoding a growth of just 1.24 per cent in FY18.

Despite Prime Minister Narendra Modi's 'Make in India' campaign and improvement in Ease of Doing Business rankings, the country's foreign direct investment (FDI) growth rate has declined in the past couple of years. The rate of growth of FDI in the country has slowed down since the financial year 2016 when it saw a robust growth of 23.05 per cent, Minister of State for Commerce & Industry C R Chaudhary revealed in the Lok Sabha.

In FY16, the FDI inflow was $55.56 billion. The next year the FDI growth slowed to 8.38 per cent, clocking in $60.22 billion. In FY18, the total FDI inflow was $60.97 billion with the growth dropping further to 1.24 per cent.

The main sectors which benefited from the FDI inflows in the last fiscal were services ($6.7 billion), computer software and hardware ($6.15 billion), telecommunications ($6.21 billion), trading ($4.34 billion), construction ($2.73 billion) automobile ($2 billion) and power ($1.62 billion).

Prime Minister Narendra Modi had launched the 'Make in India' initiative in September 2014 to drive foreign investment in the country and turn India into a global manufacturing hub.

The total FDI has increased from $45.15 billion in 2014-15 to $60.97 billion in 2017-18 under the Modi government.

The slowdown in FDI growth rate and India's performance in the World Bank's Ease Of Doing Business index are portraying two different pictures. India jumped 23 places to secure 77th spot in Ease of Doing Business index this year.

The report also recognised India as one of the top 10 countries which showed improvement in this year's assessment, for the second successive time.

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