New Delhi: In some bad news for the Modi government, Foreign Direct Investment (FDI) equity inflows to India from April to December 2018 have declined by seven per cent. Latest figures released by the Department for Promotion of Industry and Internal Trade (DPIIT) shows that India managed to attract almost $33.5 billion from April to December 2018. In the same period in 2017, India’s FDI equity flows stood at almost $36 billion.

The Modi government had stopped publishing quarterly FDI data since August 23, 2018. It resumed publishing FDI data in February this year. The latest release that captures FDI flows in the third quarter of 2018-19 shows that there has been a drastic decline in FDI in six out of the 10 sectors attracting the highest FDI flows. Sectors that have seen a decline in FDI during this period include computer software and hardware, telecommunications, construction, infrastructure, pharmaceuticals and power. In absolute dollar terms, the telecommunications sector took the biggest hit witnessing a decline of almost $3 billion in April-December 2018 as compared to same period last year. In percentage terms, the pharmaceuticals sector took the biggest hit with FDI equity inflows declining by almost 81 per cent (or $921 million) during the period.

Sectors that saw enhanced FDI equity inflows include services, trading, chemicals and automobiles. The chemicals sector was the biggest magnet for foreign investors attracting $6.1 billion in the first nine months of financial year (FY) 2018-19. This was three times more than FDI equity inflows in the chemical sector in the same period last year. The services sector attracted $5.9 billion–up 28 per cent during this period. The automobile sector attracted $1.8 billion–up almost a billion dollars.

This is the first time that FDI equity flows have declined in the first nine months of a financial year since the Modi government came to power. In April-December 2015, FDI equity inflows had increased 40 per cent as compared to the same period last year. In April December 2016, FDI equity inflows had risen 22 per cent. The very next year, during the same period, FDI equity inflows had risen negligibly by less than half a per cent.

During April-December 2018, FDI equity inflows from Mauritius halved to $6 billion. FDI equity flows from Singapore stood at $13 billion – an increase of over 40 per cent. There was a steep decline in investment in New Delhi, Mumbai and Bengaluru regions. There was a rise in FDI equity inflows to Ahmedabad and Hyderabad regions during the period.

Coursesy:  Business Standard

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