New Delhi:
This week India crossed a major milestone as a top global investment destination. Latest data reveals that Foreign Direct Investment into India crossed the thousand-billion-dollar mark since the turn of the century, showing how India has been the favoured destination for foreign investors.
The data released by the Department for Promotion of Industry and Internal Trade or DPIIT showed that the cumulative amount of FDI, including equity, reinvested earnings and other capital, stood at USD 1,033.40 billion (or $1 trillion) between April 2000 and September 2024.
To get a perspective of just how gigantic a trillion dollars really is, let’s take this simple example – If a person was to earn one dollar (Rs. 84) per second (i.e. a trillion dollars in trillion seconds) – then it would take the person 11.5 days to earn a million dollars. But here’s where is gets interesting. Continuing to earn a dollar a second, it would take the person 31.7 years to reach the billion-dollar mark, and a staggering 31,709 years to reach the trillion-dollar figure.
Another thought-provoking way to look at this is that India, which is the fifth largest global economy, has an overall GDP of around $3.89 trillion in 2024. It used to be around $2 trillion in 2014. Now compare that to the FDI inflow of $1 trillion in the last two decades.
SOURCE OF THE FDI
So, where did all this investment come from? Which are the countries from which these investments flowed in? One might assume that the top spot would be either the US, which is the largest economy in the world, or perhaps China, which is the second-largest economy globally. But it’s neither.
The country which has contributed the most in terms of FDI in India during this period is Mauritius – a massive 25 per cent of all FDI inflows came via this route. Mauritius was closely followed by Singapore at 24 per cent. The United States of America came a distant third with 10 per cent.
Other countries which have invested significantly in India include The Netherlands at 7 per cent, Japan at 6 per cent, The UK at 5 per cent, UAE at 3 per cent, and the Cayman Islands, Germany, and Cyprus all accounting for 2 per cent each.
SECTORS WHICH SAW BIG INVESTMENT
The sector which saw the highest investment was the services and allied sector. There was significant investment in computer software and hardware, telecommunications, trading, construction, infrastructure development, automobile, chemicals, and pharmaceuticals.
FDI INFLOWS ON THE RISE
Of the 1,033 billion dollars, USD 667.4 billion came in the last ten years between 2014 and 2024 showing a 119 per cent uptick in investment when compared to the previous decade. The data also revealed that FDI inflows have come for nearly 60 sectors across 31 states and union territories in India.
To attract more investment over time, India has also made its investment policies liberal and lucrative. Reforms have resulted in most sectors, barring ones of strategic importance, see 100 per cent FDI under the automatic route.
Giving impetus to the ‘Make in India’ initiative, the manufacturing sector has seen a 69 per cent rise in FDI in the last ten years as compared to the prior ten.
WHICH SECTORS ARE OPEN AND WHAT IS THE PROCEDURE
FDI is allowed through the automatic route in most of the sectors, while in areas like telecom, media, pharmaceuticals and insurance, government approval is required for foreign investors.
Under the government approval route, a foreign investor has to get a prior nod from the ministry or department concerned, whereas, under the automatic route, an overseas investor is only required to inform the Reserve Bank of India (RBI) after the investment is made.
At present, FDI is prohibited in some sectors. They are lottery, gambling and betting, chit funds, Nidhi company, real estate business, and manufacturing of cigars, cheroots, cigarillos and cigarettes using tobacco.
(Inputs from PTI)