FDI Inflows Fall

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By Moderator June 29, 2019 13:47

FY19 saw FDI equity inflows falling 1% to $44.4 bn in fresh policy challenge. In this article, you will know more about FDI.

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  • For the first time in six years, foreign direct investment equity inflows dropped 1% year-on-year, to $44.4 billion, in FY19
  • In 2018, FDI inflows were $1301 billion—16% lower than the $1,554 billion in 2017.
  • Globally, FDI inflows contracted in the past three years.
  • The US and China were the preferred destinations for investment by foreign investors and the US continued to receive the highest FDI inflows for the past four years.
    • These two nations accounted for 36% of the total world FDI inflows last year.
  • In India, the top three sectors that received the highest equity inflows were
    • Services,
    • Computer hardware and software, and
    • Trading
  • These accounted for 45% of total equity inflows in FY19.
    • Inflows in the services sector grew 37% in FY19 to $9.2 billion. Equity inflows in the automobile sector witnessed a growth of 26%.
  • The two sectors where FDI inflows dropped the most in 2018-19 are telecommunications (fell 56% to $2.7 billion) and pharmaceuticals (dropped 74% to $266 million).
  • Maharashtra retained the top position in FDI inflows with a 26% share, followed by Delhi (23%) and Karnataka (15%).
    • In FY19, equity inflows in Andhra Pradesh, West Bengal, Punjab, and Rajasthan more than doubled as compared with the previous year, whereas Tamil Nadu and Gujarat registered a decline in inflows as compared with the previous year.
  • Mauritius remained India’s top source for FDI, its share declined by 2 percentage points to 32% in 2018-19, while the share of Singapore rose by 2 percentage points to 20% during the same year.

Reason

While the government had initiated several measures to boost its lower inflows in FY19 were because of

  • Tax reforms in the US,
  • Increase in interest rates by some of the major global central banks, and
  • Anxiety over the trade war between the US and China.

Lower FDI inflow could put pressure on the country’s balance of payments

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Source: https://www.livemint.com/news/india/fdi-inflows-contract-for-the-first-time-in-6-years-1559070850501.html

Moderator
By Moderator June 29, 2019 13:47