NEW DELHI: India recorded a 29% increase in gross foreign direct investment (FDI) inflows, reaching $42.3 billion in the first half of the current fiscal year (April-September 2024). This marks a significant recovery after two consecutive years of decline and pushes the total FDI inflows since April 2000 to $1 trillion, signaling renewed global investor confidence in India.
The surge is even more striking when focusing on equity inflows, which jumped 45% to just under $21 billion during the same period. Cumulatively, equity inflows since April 2000 stand at $708 billion, according to data from the Department for Promotion of Industry and Internal Trade (DPIIT).
India in the Global FDI Landscape
According to OECD data for January-June 2024, the United States topped the list of FDI destinations with $153 billion, followed by Brazil ($32 billion) and Mexico ($31 billion). India ranked eighth during this period, while FDI inflows into China dropped 29% to $70 billion. Data for January-August 2024 pegged China’s FDI at $82 billion, reflecting a 31% year-on-year decline.
A Shifting Global FDI Landscape
The global FDI landscape has become increasingly competitive post-COVID-19, as countries offer aggressive incentives to attract investors. This shift is part of a broader strategy by companies seeking to diversify production bases and reduce reliance on China—a trend known as “China Plus One.”
Nations such as Mexico and Vietnam have emerged as beneficiaries of this strategy, while industrial policies worldwide, including the U.S. Inflation Reduction Act and Australia’s investment incentives, aim to court foreign investors. India, too, has implemented measures such as the production-linked incentive (PLI) scheme to boost its appeal.
Asia: The Center of FDI Activity
Asia remains the epicenter of global FDI activity. The World Investment Report 2024 by UNCTAD shows that Asia attracted $678 billion in FDI in 2023—more than half of the global total of $1.3 trillion. This figure is 50% higher than the $426 billion that went to developed markets, underlining the region’s importance as a key battleground for global investment flows.
Looking Ahead
With the global focus on diversifying supply chains and increasing production capabilities, India is well-positioned to attract more FDI. However, the return of the Trump administration in the U.S. next month could introduce changes in global investment trends, potentially influencing the flow of FDI into emerging markets.
