Facts for Prelims (FFP)
Context: Foreign Direct Investment (FDI) inflows into India fell 3.5% to $44 billion in FY24 due to reduced investments in services, telecom, and pharma sectors.
However, January-March FY24 saw a 33.4% rise to $12.38 billion. Total Foreign Direct Investment (FDI), including reinvested earnings, declined marginally to $70.95 billion from $71.35 billion in FY23. Notably, Maharashtra (which received the highest FDI) and Gujarat saw increased inflows, while Karnataka and several other states experienced declines.
In FY 2023-24, Singapore was the top source of FDI inflows into India, followed by Mauritius and the USA. From 2000-2024, the top five countries for FDI were Mauritius, Singapore, the USA, the Netherlands, and Japan. The leading sectors for FDI in FY 2023-24 were Computer Software & Hardware, Services, and Construction. Over the 2000-2024 period, the top sectors were Services, Computer Software & Hardware, Trading, Telecommunications, and the Automobile Industry.
About FDI
- Definition: Investment by a company or individual in one country into business interests in another country.
- Policy: Formulated by the Department for Promotion of Industry and Internal Trade (DPIIT).
- Routes:
- Automatic Route: No government approval is required.
- Government Route: Approval required.
- Inclusions: Foreign Currency Convertible Bonds, Foreign Institutional Investment (with conditions), and Global Depository Receipts.
- Prohibitions: Lottery Business, Gambling and Betting, Chit Funds, Nidhi Company, Trading in Transferable Development Rights, etc.
Significance of FDI
- Stimulates economic growth.
- Promotes development in backward areas.
- Ensures exchange rate stability.
Source: ET
