Foreign Direct Investment

It is the investment made by a person or a company in one country into businesses located in another country.
Generally, FDI takes place when an investor establishes foreign business operations or acquires foreign business assets.

The entry of Foreign Direct Investment by non-residents into India is regulated through two routes –automatic route and approval route.
Under the Automatic Route, the foreign investor does not require any approval from the Reserve Bank or Government of India for the investment.
Under the approval route, the foreign investor should obtain prior approval of the Government of India agencies or bodies specified.

India has attracted the highest ever total FDI inflow of US$ 81.72 billion during the financial year 2020-21 and it is 10% higher as compared to the last financial year 2019-20 (US$ 74.39 billion).

Measures taken by the Government on the fronts of Foreign Direct Investment policy reforms, investment facilitation and ease of doing business have resulted in increased FDI inflows into the country.
The following trends in India’s Foreign Direct Investment are an endorsement of its status as a preferred investment destination amongst global investors:
FDI equity inflow grew by 19% in the F.Y. 2020-21 (US$ 59.64 billion) compared to the previous year F.Y. 2019-20 (US$ 49.98 billion).

In terms of top investor countries, ‘Singapore’ is at the apex with 29%, followed by the U.S.A (23%) and Mauritius (9%) for the F.Y. 2020-21.
‘Computer Software & Hardware’ has emerged as the top sector during F.Y. 2020-21 with around 44% share of the total FDI Equity inflow followed by Construction (Infrastructure) Activities (13%) and Services Sector (8%) respectively.
Under the sector `Computer Software & Hardware’, the major recipient states are Gujarat (78%), Karnataka (9%) and Delhi (5%) in F.Y. 2020-21.
Gujarat is the top recipient state during the F.Y. 2020-21 with 37% share of the total FDI Equity inflows followed by Maharashtra (27%) and Karnataka (13%).
The major sectors, namely Construction (Infrastructure) Activities, Computer Software & Hardware, Rubber Goods, Retail Trading, Drugs & Pharmaceuticals and Electrical Equipment have recorded more than 100% jump in equity during the F.Y. 2020-21 as compared to the previous year.
Out of top 10 countries, Saudi Arabia is the top investor in terms of percentage increase during F.Y. 2020-21.

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