DIPP has stopped releasing FDI data for past 6 months despite RBI inputs

RBI data shows inflows have fallen for the first time since 2014

The Department of Industrial Policy and Production (DIPP) has not published foreign direct investment (FDI) figures since June last year, despite the Reserve Bank of India (RBI) providing it with regular inputs. Earlier, this data was published every quarter.

The DIPP compiles total investment inflows with the data from the RBI as well as its own databases. The last time they published this data was in August last year; that was for the April-June period.

Officials at the department refused to explain why the data had not been released, despite the RBI continuing to release its own quarterly and monthly estimates.

A close look at the RBI’s data shows there is a marked slowdown and contraction in FDI. This is the first time this has happened since Prime Minister Narendra Modi’s government came to power in 2014.

In the April-November period of the current financial year (2018-19 or FY19), India received gross investment of $40.98 billion. This was 2 per cent lower than $41.82-billion investments in the same period of the previous year.

In the first financial year (2014-15) of the current government, FDI shot up by 27 per cent. The growth rate fell to 3 per cent in 2017-18.

Questions raised

The lack of figures released by the DIPP has raised questions from credit ratings agencies, private equity firms, as well as banks. Government agencies such as Invest India and the India Brad Equity Foundation, which are often the first point of contact between the government and foreign investors, have also not received the latest figures.

India’s position as an attractive FDI destination has fallen for the first time in 2018. According to the 2018 AT Kearney Foreign Direct Investment Confidence Index, India is now not among the top 10 destinations for FDI. The report suggested that investor confidence has received a knock after the country became burdened with the challenge of implementing demonetisation and the goods and services tax.

After rising for the past two years, India’s position fell three places in 2018 to 11. But despite losing its status among the top 10 for the first time since 2015, India remained the second-highest ranked emerging market (EM).

The lack of detailed data has also raised questions on the origin of funds. Figures presented by the government to Parliament last year showed that FDI from nations widely regarded as tax havens such as Cayman Islands and Hong Kong had jumped in 2017-18. 

This also included European principalities such as Liechtenstein and Luxembourg. From the Cayman Islands, inflows rose in a single year from $71.03 million to $1.23 billion. This was followed by the special administrative region of Hong Kong, under Chinese political authority, which sent over $1.05 billion worth of equity FDI, up from the $176 million a year ago.