A Slowdown in Foreign Direct Investment Fell 16% in FY23

During 2022-23, Foreign direct investment (FDI) inflows fell 16% to $71 billion (on a gross basis) and it is marked as the first decline in a decade. The reason might be the global economic situation but RBI has released the recent data after adjusting for repatriation and disinvestment by foreign investors, the direct inflow was 27?low at $41.6 billion.

DK Joshi, Chief Economist at ratings agency Crisil said, "The slowdown in FDI has been a global trend in 2022, so this doesn't come as a surprise. But India, as the fastest-growing economy in G-20, is structurally well-positioned to attract healthy FDI flows over the medium term. The government should take advantage of the ongoing diversification of global supply chains and attract foreign investments into India's manufacturing sector."

Also, Unctad's World Investment Report warned that "investor uncertainty and risk aversity could put significant downward pressure on global FDI". As per the net basis, Foreign direct investment declined 27.5% to $28 billion even though the news highlighted about outward flows fell 23% to $13.6 billion which indicates that there are still many Indian companies that went slow on investments in other countries. Last year, China saw a sudden rise in the FDI by 8% to $189 billion, according to preliminary data released.

Currently, the government has decided for banking on large investments from multiple global majors to enhance manufacturing activity in crucial sectors like electronics, chemicals, automobiles and textiles. They are ready to make India a part of the global value chain.

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