Chennai: The first five months of the financial year saw the highest-ever FDI inflow. The inflow was 13 per cent higher than the same period last year.
During April to August 2020, the country received a total FDI inflow of $35.73 billion. It is the highest ever for the first five months of a financial year, according to the government. The inflow in the first five months of this year is 13 per cent higher than $31.60 billion invested in the same period last year.
Of this, FDI equity inflow accounts for $27.10 billion. It is also the highest ever for the first five months of a financial year and 16 per cent more compared to $23.35 billion in the first five months of 2019-20.
FDI is largely made by multinational companies, large institutions and private equity and venture capital firms. Of this, private equity and venture capital firms made a total investment of $19 billion in the five month period, as per the data from EY. A major chunk of these funding has to be attributed to the investments made in Reliance and Jio platforms.
According to an earlier report of UNCTAD, India had moved into the list of top-10 countries in terms of FDI inflows in 2019 by attracting $50 billion. Despite the Covid-19 related downside risks, positive economic growth of the country in the post-pandemic period and its large market will continue to attract market-seeking investments, found UNCTAD.
In 2019, India had recorded a 20 per cent growth in FDI inflows to $50.5 billion from $42 billion in 2018. With this, India, which stood at the 12th position in the global rankings of FDI inflows in 2018, moved up to the 9th position.
FDI into India has been on a long-term growth trend and India’s large market will continue to attract market-seeking investments. However, the magnitude of the logistical challenges during both the lockdown and the recovery remain a big downside risk for FDI in the medium term.