Polymerupdate News – Light at the end of the tunnel for Indian economy: FDI inflows to India rise 3.5% to highest level ever in FY 2021-22 thanks to transformative policy measures


As India’s economy is experiencing a surge due to swift policy support measures by the government, the country, according to reports, witnessed the highest foreign direct investment (FDI) ever recorded in the financial year 2021- 22. To attract FDI, the government has liberalized investment standards, eased regulatory hurdles and nurtured international relations to make India a preferred investment destination.

Data from the Indian Ministry of Commerce and Industry showed that India attracted the highest FDI inflows on record at US$84.84 billion in the financial year 2021-22 , a 3.5% increase to US$2.87 billion from the US$81.97 billion reported the previous year. The total FDI inflow into the country was reported at US$74.39 billion in the fiscal year 2019-20. In terms of rupees, the total inflow of FDI into India stood at Rs 6,31,050 crore in the financial year 2021-22, compared to Rs 6,09,761 crore in the previous financial year. The average value of the rupee was estimated at 74.38 against the United States dollar.

Singapore emerged as the largest contributor with its share of 27.01% in FDI inflows from India, followed by the United States of America (17.94%), Mauritius (15.98%) , the Netherlands (7.86%) and Switzerland (7.31%). Thus, the top five countries cumulatively contributed 76% of the total FDI inflow to India in the financial year 2021-22.

It is worth mentioning here that the United Nations Conference on Trade and Development (UNCTAD) in its recently released World Investment Report (WIR) 2022, revealed that India has improved a position to achieve the 7th in the top 20 host economies for 2021.

“The government has implemented several transformative reforms under the FDI policy regime in sectors such as insurance, defence, telecommunications, financial services, pharmaceuticals, retail, commerce electronics, construction and development, civil aviation, manufacturing, etc. The government continues to liberalize investment restrictions, eliminate regulatory barriers, nurture international relations and improve the business environment,” said a note released by India’s Ministry of Commerce and Industry.

India is rapidly becoming a hotspot for foreign investment in manufacturing. in the previous year. At an average value of 74.38 rupees against the dollar, total FDI inflows into Indian manufacturing sector amounted to 1,58,332 crore rupees in the financial year 2021-22, an increase of over up 76% from the previous year’s Rs 89,766 crore.

The note further adds: “Changes are being made to the FDI policy after consultation with stakeholders, including apex industrial chambers, associations, representatives of industry groups and other organisations. While foreign investment is permitted under the automatic route in most sectors/activities, for strategic reasons, some investments are either restricted or permitted under the government approval route through a screening mechanism in accordance with the prescribed framework.

In India, FDI up to 100% is allowed in non-critical sectors through the automatic route, not requiring security clearance from the Ministry of Home Affairs (MHA). Prior government approval or MHA security clearance is required for investments in sensitive sectors such as defence, media, telecommunications, satellites, private security agencies, civil aviation and mining, in addition to any investment from Pakistan and Bangladesh.

All foreign investments must comply with the applicable entry route, sector cap, related conditions and sector laws adhering to company laws and rules thereunder, pricing guidelines, documentation and reporting requirements. The ministry further stated that the FDI policy regime continues to welcome all investments into the country subject to compliance with applicable entry requirements and regulations.

In a separate interaction, India’s Minister of State at the Ministry of Trade and Industry, Som Prakash, said: “India’s monetary and fiscal policies have been positioned to reduce inflation and manage the current account (CAD). Within the overall framework, monetary and fiscal adjustments are made to address emerging economic issues.

While the Reserve Bank of India (RBI) expects India’s gross domestic product (GDP) growth to stand at 7.2% for the financial year 2022-23, the International Monetary Fund (IMF) predicts a Indian economy growing by 7.4% in the current period. year. Both projections indicate that India’s economy will grow the fastest in the world in the current fiscal year. After contracting 6.6% in FY 2020-21 due to Covid pandemic lockdowns, India’s GDP posted the fastest growth in the world at 8.7% in the last year. 2021-22 financial year.

DILIP KUMAR JAI
Editor
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