Net foreign direct investment (FDI) into India hit a fresh high of $43.366 billion in the year ended March 2021 as it crossed the previous year’s high of $43.013 billion.
India’s central bank, the Reserve Bank of India said that while the direct investment to India in FY21 stood at $54.7 billion, FDI by India amounted to $11.3 billion. The FDI flows in India were augmented by a stake sale by Reliance Industries group companies to Facebook, Google and a number of other global investors.
The foreign portfolio investments jumped significantly as well. The strong inflow of FDI and foreign portfolio investor (FPI) money ensured that the country’s foreign exchange reserves jumped significantly by over $100 billion and amounted to $576.8 billion as on the week ending April 2, 2021.
Inflows have been driven by pockets of growth in the Indian economy, production-linked incentive schemes offered by the government for several sunrise sectors, potential growth in digital economy segments, as well as privatization plans of the Federal government.
Four states — Maharashtra, Gujarat, Karnataka and NCT of Delhi — accounted for 90 per cent of the FDI inflows received during the year, with Maharashtra receiving nearly over 46 per cent of the flows, followed by Gujarat at 24 per cent, according to government data for first nine months of the previous financial year.
According to the Ministry of Finance’s Monthly Economic Report for April, “FY 2020-21 was a bullish year for stock markets, supported by stimulus measures, surplus liquidity, and record FPI flows.”
