India attracts record FDI of $81 bn in FY21; Gujarat remains top recipient

Despite Covid shock, equity inflow grows 19%; Gujarat remains top recipient

Foreign direct equity investments (FDI) inflows grew by 19 per cent year-on-year (YoY) in financial year 2020-21 (FY21) to a record $59.64 billion, according to data released by the Department for Promotion of Industry and Internal Trade (DPIIT) on Monday.

Despite the disruption caused by the Covid-19 pandemic in FY21, India attracted the highest ever total FDI inflow, which includes equity capital of unincorporated bodies, reinvested earnings, and other capital. Total FDI stood at $81.72 billion, up 10 per cent YoY. In FY20, India attracted gross inflows of $74.39 billion.

“Measures taken by the government on the fronts of FDI policy reforms, investment facilitation and ease of doing business have resulted in increased inflows. The trends are an endorsement of India’s status as a preferred investment destination amongst global investors,” an official statement said.

According to the data shared by the government, Singapore remained the largest source of FDI for the third consecutive year, with a share of 29 per cent. It was followed by the US with 23 per cent share, and Mauritius with 9 per cent.

“Out of top 10 countries, Saudi Arabia is the top investor in terms of percentage increase during FY21. It invested $2.8 billion in comparison to US$ 89.93 million reported in the previous financial year,” the statement said, adding that there was a 227 per cent and 44 per cent increase recorded in FDI equity inflow from the USA and the UK, respectively.

Gujarat was the top recipient of FDI among states, with 37 per cent share of total FDI equity inflows, followed by Maharashtra and Karnataka with 27 per cent and 13 per cent, respectively.

Gujarat attracted the lion’s share of inbound FDI under the computer software and hardware sector at 78 per cent. This was followed by Karnataka and Delhi at 9 per cent and 5 per cent, respectively.

“Majority of the equity inflow of Gujarat has been reported in the sectors ‘Computer Software & Hardware’ (94 per cent) and Construction (Infrastructure) Activities (2 per cent) during the FY21,” the statement said.

Computer software and hardware emerged as the top sector in FY21 with around 44 per cent of the total FDI equity inflow, followed by construction and infrastructure-related activities at 13 per cent, and services sector’s with 8 per cent.