Global recession, crisis due to Russia-Ukraine conflict led to fall in FDI

Threat of a global recession, economic crisis triggered by the Russia-Ukraine war and dip in the real GDP growth rate of countries like Singapore, the US and UK are some of the reasons for FDI decline in India in 2022-23, Parliament was informed on Friday.

Foreign direct investment (FDI) into India declined 22 per cent to USD 46 billion in 2022-23, dragged by lower inflows in computer hardware and software, and automobile industry.

Total FDI, which includes equity inflows, reinvested earnings and other capital, also declined 16 per cent to USD 70.97 billion in the last fiscal as against USD 84.83 billion in 2021-22.

In a written reply to the Rajya Sabha, Minister of State for Commerce and Industry Som Parkash said the major reasons for shortfall in FDI in 2022-23 include a tighter financial environment and a string of financial crises in global markets in general and developing markets in particular besides the economic crisis due to Russia-Ukraine conflict.

"Post pandemic, countries have adopted various protectionist measures to decrease reliance on other countries and protect their own domestic industries. This could also be a possible reason affecting investor sentiments. The real GDP growth rates of Singapore, the US and UK have decreased in 2022, which are the major source countries for FDI," he said.