Net FDI into India reaches 21-month high at $5.9 billion in October

Foreign Direct Investment

The net Foreign Direct Investment (FDI) into India reached a 21-month high in October 2023. This increase was attributed to robust gross inflows and lower repatriation, as indicated by data from the Reserve Bank of India (RBI).

According to RBI data, the net FDI in India for October stood at $5.9 billion. This marked a significant increase compared to the figures from September 2023, which were $1.55 billion, and October 2022, where it stood at $1.17 billion.

Around four-fifths of the gross inward FDI equity flows in India were directed to sectors such as manufacturing, retail and wholesale trade, electricity and other energy sectors, and financial services, as per the RBI bulletin.

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In October 2023, the major source countries for FDI into India were Mauritius, Singapore, Cyprus, and Japan. These nations collectively contributed more than four-fifths of the total FDI inflows during that month.

However, despite the positive October figures, data for the fiscal year 2023-24 (April-October) showed a moderation in net FDI, which amounted to $10.4 billion. This was a decrease from the corresponding period in the previous fiscal year, which recorded net FDI at $20.8 billion.

Net inflows under external commercial borrowings (ECBs) and non-resident deposit accounts are much higher than last year. India’s external vulnerability indicators exhibit higher resilience in comparison with EME peers as well as since the taper tantrum period.

India’s outward FDI commitments fell by 19.6 percent on a monthly basis and around 58 percent on-year in November.

As per RBI data, India’s outward FDI commitments stood at $1.55 billion in November, as compared to $3.67 billion in a year ago period and $1.93 billion in October, 2023.

Outward FDI, expressed as a financial commitment, comprises three components: equity, loans, and guarantees.

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The equity commitments declined to $729.57 million in November 2023 from $870.37 million in October 2023, and $1.69 billion recorded in November 2022, data showed.

Similarly, loan commitments declined to $184.96 million in November, down from $250.42 million in October, and $300.58 million in November 2022.

Guarantees issued for overseas units decreased to $637.26 million in November from $809.26 million in October. It was sharply down to $1.68 billion a year ago.