The rise in global uncertainty in the wake of the Russia-Ukraine conflict, FDI equity inflows in the manufacturing sector in the first half of the current fiscal (April-September) fell below their corresponding level in the first half of 2021 - 2022, the document which was tabled in India Parliament said.
According to the report, the global monetary tightening has further limited FDI stock inflows. "A rebound in FDI inflows is, however, expected as the Indian economy sustains its high growth while monetary tightening the world over eventually eases with the weakening of inflationary pressures," the survey said.
FDI equity inflows into India contracted by 14 percent to $26.9 billion during the April-September this fiscal, according to the data of the Department for Promotion of Industry and Internal Trade (DPIIT).
Total FDI inflows, which include equity inflows, re-invested earnings, and other capital, declined to $39 billion during the first six months of the current fiscal year as against $42.86 billion in the year-ago period.
The survey said that despite an overall drop in foreign investments in the first half of this fiscal, inflows have stayed above the pre-pandemic levels, due to structural reforms and measures taken by the government to improve the ease of doing business, making India an attractive FDI destination in the world.
"The government has implemented an investor-friendly FDI policy under which FDI up to 100 percent is permitted through automatic route in most sectors," it said adding India continues to open up its sectors to global investors by raising the investment limits, removing regulatory barriers, developing infrastructure, and improving the business environment.
During the first half of this fiscal, Singapore emerged as the top investor. It was followed by Mauritius, the UAE, the USA, the Netherlands, and Japan.
Throughout the first half of this fiscal year, the computer software and hardware industry drew the most investment. Services, trading, chemicals, autos, and infrastructure development activities came next.
The country has registered its highest-ever FDI inflows of $84.84 billion in 2021-22.
A decline in foreign investments could put pressure on the country's balance of payments and may also impact the value of the rupee.
Vietnam’s FDI projected to reap up to 38 billion USD in 2023
According to the Foreign Investment Agency under the Ministry of Planning and Investment (MPI), Vietnam is likely to attract 36-38 billion USD in foreign direct investment (FDI) in 2023. The figure was nearly 22.4 billion USD in 2022.
Deputy Director of the FIA Do Van Su said disbursement of foreign investment this year is expected to hit 22-23 billion USD. Foreign investment in Vietnam remained a bright spot in the country’s 2022 economic panorama, despite experiencing a year-on-year decrease in value, thanks to its disbursement reaching a five-year high.
Data from the MPI showed as of December 20, there were 2,036 newly-registered FDI projects worth 12.45 billion USD, up 17.1% year-on-year in the quantity, but down 18.4% in value.
In addition, 1,107 projects had their capital raised with a total amount of 10.12 billion USD, up 12.4 % and 12.2 % year-on-year, respectively.
Capital contributions and share purchases (foreign indirect investment or FII) were worth 5.15 billion USD, down 25.2 %. This figure made the total foreign investment in the country in 2022 top 27.7 billion USD.
Meanwhile, FDI disbursement in 2022 hit nearly 22.4 billion USD, up 13.5% year-on-year, making it the highest amount in the past five years, the General Statistics Office (GSO) reported.
