FDI equity inflows up 28% in June quarter to $16.3 billion, from $12.75 billion last year

The first quarter of the current fiscal saw Foreign Direct Investment (FDI) equity inflows jump by 28 per cent year-on-year to $16.33 billion, as per latest figures released by the Department for Promotion of Industry and Internal Trade (DPIIT). For the April to June period last year, the figure stood at $12.75 billion.

The uptick in FDI equity inflows is more impressive on the quarter-on-quarter basis - up over 50 per cent from $10.8 billion in Q4FY19. The total FDI inflows , including re-invested earnings as well as other capital, on the other hand have shot up 26 per cent (y-o-y) to $21.3 billion in the June quarter of FY20. However, according to the government factsheet, these are provisional figures, subject to reconciliation with the RBI.

The top three sectors that received maximum foreign funds are telecom, the services sector - including the BFSI vertical (banking, financial services and insurance), non-financial/business activities, outsourcing, R&D and courier services, among others - and computer software and hardware. While the telecom sector attracted FDI equity investments to the tune of $4.2 billion in Q1FY20, the other two sectors bagged $2.7 billion and $2.2 billion, respectively. However, on a cummulative basis, the last fiscal saw the services sector top the rankings, attracting over $9 billion of foreign investments, 250 per cent more than the telecom sector, which stood in the third spot.

Singapore, which overtook Mauritius as the top source of foreign equity inflows in FY19, continued to maintain its top rank in the quarter under review. The island city-country's share in the total investment pie was nearly 33 per cent in the first quarter, or $5.3 billion. Mauritius came in second at $4.6 billion followed by the US ($1.4 billion) and the Netherlands ($1.3 billion).

FDI inflows had declined for the first time in six years in 2018-19, falling by 1 per cent to $44.37 billion. That prompted the Modi government to announce a fresh round of FDI reforms, amid the deceleration in India's GDP growth rate. The Union Cabinet last month allowed 100 per cent foreign investment in coal mining and contract manufacturing along with easing sourcing norms for single-brand retailers and approving 26 per cent overseas investment in digital media. Previously, in its first term, the government had liberalised FDI norms in sectors such as defence, medical devices, construction development, retail and civil aviation.

So which cities have bagged the lion's share of the FDI funds? In Q1FY20, the National Capital Region attracted around $5 billion, followed by Karnataka ($3 billion) and Gujarat ($2.6 billion). Maharashtra (along with Dadra & Nagar Haveli and Daman & Diu) came in the fourth rank with $1.5 billion of FDI equity inflows.

Also read: Fixing The Slowdown

Also read: FDI push: From luxury apparel to perfumery labels, top 40 global brands may soon enter India