FDI inflows to India on a declining trend since 2022-23

Foreign direct investment (FDI) inflows into the country stood at $62.48 billion between April to December 2024 and have been on a declining trend since 2022-23.

As per data shared by Minister of State for Finance Pankaj Chaudhary in the Lok Sabha on March 10, FDI inflows to India stood at $84.83 billion in FY22, before declining to $71.35 billion in FY23 and $71.27 billion in FY24.

“To attract more FDI, the Government has put in place an investor friendly FDI policy, wherein most of the sectors, except certain strategically important sectors, are open for 100% FDI under the automatic route,” Chaudhary informed the Lok Sabha in response to a question on FDI inflows. The Government has implemented several FDI reforms across sectors such as defence, pension, and other financial services, he further noted. “The government reviews the FDI policy on an ongoing basis and makes significant changes from time to time, to ensure that India remains an attractive and investor friendly destination,” he said.

Declining FDI inflows into India has been a cause for worry with several foreign investors raising concerns over policy uncertainty and taxation.

Meanwhile, in response to another question, Chaudhary said that net investments made by the foreign portfolio investors (FPIs) in equities stood at Rs 23,791 crore between June and December 2024 compared to Rs 1,71,107 in calendar year 2023.

Domestic institutional investors (DIIs) invested Rs 3,12,988.59 crore between June and December 2024 in equities and Rs 1,83,278.51 crore in calendar year 2023.

“Stock market movements are a function of investor perceptions along with other factors which may include, inter-alia, global economic scenarios affecting foreign capital flows, domestic macroeconomic parameters and overall corporate performance,” he said, adding that  Securities and Exchange Board of India, as the statutory regulator of securities markets, is mandated to put in place regulatory and surveillance frameworks for development of the securities markets and safeguard interest of investors.