India Receives Highest FDI of $81.72 Billion in COVID-19 Pandemic Year

Foreign direct investments (FDI) into the country grew 19 per cent to $59.64 billion during 2020-21 on account of measures taken by the government on the fronts of policy reforms, investment facilitation and ease of doing business, the commerce and industry ministry said on Monday. Total FDI, including equity, re-invested earnings and capital, rose 10 per cent to the “highest ever” of $81.72 billion during 2020-21 as against $74.39 billion in 2019-20.

“FDI equity inflow grew by 19 per cent in 2020-21 ($59.64 billion), compared to 2019-20 ($49.98 billion),” the ministry said in a statement. In terms of top investor countries, Singapore is at the top with 29 per cent share. It was followed by the US (23 per cent) and Mauritius (9 per cent) during the last fiscal.

“Measures taken by the government on the fronts of FDI policy reforms, investment facilitation and ease of doing business have resulted in increased FDI inflows into the country,” it said. It added that the inflows are an endorsement of India’s status as a preferred investment destination among global investors.

The computer software and hardware sector attracted the highest inflows with around 44 per cent share of the total FDI equity inflows. It was followed by construction (infrastructure) activities (13 per cent) and services sector (8 per cent), respectively. “Gujarat is the top recipient state during 2020-21 with 37 per cent share of the total FDI equity inflows, followed by Maharashtra (27 per cent) and Karnataka (13 per cent),” it added.

Commenting on the numbers, Deloitte India President (Financial Advisory) Uday Bhansali said this “record breaking” level of FDI inflow, especially when Indian economy was under the shadow of COVID-19 throughout the year, reaffirms India as one of the most sought-after destinations for global capital hunting for “superior” yield. Shardul Amarchand Mangaldas & Co Partner (Mergers & Acquisitions, Private Equity and General Corporate) Iqbal Khan said that even though the pandemic continues, the positive FDI trend is expected to continue for certain pandemic-resilient sectors like pharmaceutical, life sciences and tech-enabled services.

“This is primarily due to the extensive dry powder focussed on promising investment opportunities in India and the government’s pro-FDI policies,” he said.

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