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Journalism of Courage
Foreign Direct Investment (FDI) inflows into the country declined by 16 per cent to $71 billion on a gross basis in the fiscal ended March 2023 impacted by weak global factors.
This is the first fall in FDI inflows in the country in a decade.
In the fiscal year 2022 (FY22), FDI inflows in the country stood at $84.835 billion.
On a net basis, FDI inflows into India fell 27 per cent to $28.014 billion in FY23 from $38.59 billion in FY22.
“The fall in FDI inflows is more likely due to global push factors (tighter developed market (DM) monetary policy), while domestic pull factors (supply chain relocation) have yet to materially lift FDI,” Nomura said in a note on Wednesday.
The fall in inflows in the previous fiscal appears to have been led by the services sector, with IT-related FDI (the largest component) likely slowing due to lower start-up sector inflows.
During the year, inflows in auto sector, construction and broader services also went down, while trading, pharma, energy and chemicals sectors rose.
Nomura said FY24 will also be a challenging year because of global uncertainty and expects a turnaround in FDI inflows more likely from FY25.
