FDI inflows to ‘rebound’ in coming months- MoF

FDI inflows to ‘rebound’ in coming months: MoF

Despite declining in H1 of the current fiscal, FDI inflows to India are expected to rebound on account of strong macroeconomic fundamentals, favourable business environment and rising growth, in the coming months, the finance ministry said in its Half-Yearly Economic Review 2023-24 report on Friday.

“Evidence to this effect is seen in a sharp rebound in FDI in October 2023,” the ministry said. During the month, FDI inflows reached a 21-month high at $5.9 billion.

A similar trend is visible in other emerging market economies, such as China as well. “This is likely due to hikes in interest rates in the developed economies, monetary tightening and general uncertainties prevailing in these economies due to geopolitical conflicts,” the report said.

Gross FDI inflows to India were 15.9% lower on year in H1 FY24. FDI equity inflows were lower sharply by 23.4% during the period.

The Q2 FY24 Balance of Payment data showed net FDI outflows ($0.3 billion) against inflows of $5 billion in Q1FY24 and $6.2 billion in Q2FY23.

Net FPI inflows in Q2FY24 at $4.95 billion too were much lower than $15.73 billion in Q1FY24 and $6.5 billion in Q2FY23.

In H1, the moderation in FDI flows was majorly witnessed in communication services, retail and wholesale trade and manufacturing sectors, the finance ministry said.

Singapore, Mauritius, Japan, the USA, and the Netherlands were the major source countries, contributing more than two-thirds of the FDI equity flows.