FDI in Figures
According to UNCTAD's 2022 World Investment Report, after reaching an all-time high in 2020, FDI inflows decreased from USD 64 billion to USD 44 billion in 2021. However, the stock of FDI increased in 2021, reaching USD 514 billion. India ranks 5th among the top 20 FDI host economies and the largest host in the sub-region; the country historically accounts for 70-80% of inflows into the region. Overall, M&A declined in 2021. However, 108 new international project finance deals were announced in the country: a significant increased when compared to the 20- project average for the last decade. The largest number of projects was in renewables, with other significant investments made in the construction and manufacturing industries. Notable projects include a USD 13.5 billion steel and cement plant by Japanese company, Arcelormittal Nippon Steel, and the construction of a new car manufacturing facility by Suzuki Motor, for USD 2.4 billion.
During the past couple of years, India has relaxed administrative regulations for foreign investors in some industrial sectors by abolishing the requirement for approval by the Reserve Bank of India under certain conditions. The overall growth of FDI in India is thanks to its many assets, especially its high degree of specialisation in services, with a skilled, English-speaking and inexpensive labour force and a potential market of one billion inhabitants. Mauritius, Singapore, the U.S., the Netherlands, Japan, the U.K., Germany, and the United Arab Emirates are the main investing countries in India. Investments were mainly oriented towards services, computer software and hardware, telecommunications, trade, the automobile industry, construction, and chemicals.
According to the Economist Business Environment, India ranks 64 out of the 82 countries reviewed for their investment climate. The country has conducted a remarkable reform effort, and given the size of the country's economy, these reform efforts are particularly commendable. Since the implementation of these reforms, more than 2,000 companies have used the new law. Global investors typically focus on India mainly because of its demographics, but also for its stable barometers, whether it be inflation, fiscal deficit or growth. However, the country still has several restrictive laws on foreign investment, excessive bureaucracy, and high levels of corruption. Still, given India’s growing demographics, and huge e-commerce and technological markets, activity in both areas are expected to grow in the following years. Among the biggest investments that occurred in recent years is the merger Sony Pictures Networks India, a subsidiary of Sony Pictures Entertainment Inc., and Zee Entertainment Enterprises for USD 1.575 billion.
Foreign Direct Investment |
2020 | 2021 | 2022 |
FDI Inward Flow (million USD) |
64,072 | 44,763 | 49,355 |
FDI Stock (million USD) |
480,127 | 514,112 | 510,719 |
Number of Greenfield Investments* |
411 | 459 | 1,008 |
Value of Greenfield Investments (million USD) |
22,750 | 16,374 | 77,946 |
Source: UNCTAD, Latest data available.
Note: * Greenfield Investments are a form of Foreign Direct Investment where a parent company starts a new venture in a foreign country by constructing new operational facilities from the ground up.
FDI EQUITY INFLOWS BY COUNTRY AND INDUSTRY
Main Investing Countries |
FY 2020/21 (April 2020-March 2021), in % |
Mauritius |
28.0 |
Singapore |
22.0 |
USA |
8.0 |
Netherlands |
7.0 |
Japan |
7.0 |
United Kingdom |
6.0 |
Germany |
2.0 |
UAE |
2.0 |
Main Invested Sectors |
FY 2020/21 (April 2020-March 2021), in % |
Services sector (including financial, banking and insurance) |
16.0 |
Computer software and hardware |
13.0 |
Construction |
10.0 |
Telecommunications |
7.0 |
Trade |
6.0 |
Automobile industry |
5.0 |
Chemicals |
3.0 |
Source:
Department of Industrial Policy and Promotion, Ministry of Commerce and Industry, Latest data available.
- Form of Company Preferred By Foreign Investors
-
Partnership or Private Limited.
- Form of Establishment Preferred By Foreign Investors
-
Joint Venture company
- Main Foreign Companies
-
India is an investment-friendly nation and has attracted the attention of leading multinational organizations, such as Vodafone, Amazon, Unilever, Samsung, Adidas, Lotte, DHL, Mercedes-Benz, Toyota, Garnier, Panasonic, LG, Microsoft, IBM, Nestlé, Coca-Cola etc.
- Sources of Statistics
-
Ministry of Finance
Department of Industrial Policy and Promotion
India Brand Equity Foundation
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Latest Update: November 2023