Net FDI declines by 62% to $10.5 billion in FY24, shows RBI data

At $10.58 billion, this is lowest net FDI into the country since 2007; Gross FDI stable at $71 billion

Net foreign direct investment (FDI) flows into India dropped 62.17 per cent to $10.58 billion in 2023-24 (FY24) — the lowest since 2007 — from $27.98 billion the previous year. This was mainly on account of higher repatriation of capital and Indian companies’ investments abroad.

According to the latest Reserve Bank of India (RBI) data, $44.4 billion of the $70.9 billion gross FDI flows into the country in FY24 was repatriated through dividends, share sale or disinvestment, while another $15.96 billion was invested overseas by Indians.

In FY23, gross FDI flows had been $71.3 billion. Of this, $29.3 billion had been repatriated, and India’s outward FDI had stood at $14 billion. So, net FDI inflows came to $27.98 billion.

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According to the RBI’s latest ‘State of Economy’ report, more than 60 per cent of the FDI equity flows were directed towards manufacturing, electricity and other energy, computer services, financial services, and retail and wholesale trade. More than 80 per cent of the flows was accounted for by Singapore, Mauritius, the US, the Netherlands, Japan and the UAE.

Global FDI flows have been impacted in recent years by higher borrowing costs, deepening geo-fragmentation and rising protectionism. Nonetheless, India has been among the top 10 economies expected to see a high FDI momentum in 2024, the RBI report said, quoting FDI Intelligence, a FDI publication of FT Ltd.

Since the onset of the Covid-19 pandemic, there has been a structural change in global investment patterns, with FDI flows shifting from developed economies to developing ones. The share of global FDI capital expenditure originating from G20 emerging markets rose to 14.9 per cent in 2023 from 8.2 per cent in 2003. Indian companies announced over 550 greenfield FDI projects abroad, the highest in any year before, the RBI report added.