India Registers Highest Ever FDI Inflow of ₹7 Lakh Crore In 2020-21

India has registered the highest-ever FDI (Foreign Direct Investment) inflow of ₹7,01,580 Crore (84.8 billion dollar) during the period of 2020-21.

Inflows from foreign direct investment (FDI) to India reached USD 84.8 billion between 2021-22 and last year. This is the highest annual FDI inflow, according to Som Prakash, Minister of State for Commerce and Industry. 

The Minister of State for Commerce and Industry was responding to a question by the parliament during the winter session. 

Also Read: Why India Is Slow On Chinese FDI Investments

In his speech on the Bi-monthly Monetary Policy Statement, Shaktikanta Das, Governor of RBI, stated that the Net Foreign Direct investment (FDI), stood at USD 22.7 Billion during the April-October 2022 period, compared to USD 21.3 Billion in the same period last year.

India has taken many steps to attract FDIs from all over the globe and has implemented a variety of policies to ensure that India remains a lucrative country as well as a preferred destination when it comes time for investors. 

MoS Somprakash also highlighted the fact that India has seen a surge in FDI flows, from USD 45.1 million in 2014-15 to USD $84.8 billion by 2021-22.

FDI is one of the key catalysts for economic growth in a country. FDI, in simpler terms, is an investment made by a company or individual in one country to support business interests in another country. 

It allows foreign investors to pursue their business interests without being citizens of the country. There have been many instances when people disapprove of FDI. 

It might result in losing control over an organization. However, the economic growth that FDI produces cannot be ignored.

According to information from the Ministry of Commerce & Industry the largest share of FDI is received by the computer software & industry and the automobile industry. 

Together, these two sectors account for more than half of FDI flow in 2021-22. Top recipients of FDI are Maharashtra, Delhi and Karnataka.

Foreign investments in India are governed by the Foreign Exchange Management Act 1999 (FEMA).

The Automatic Route- This is the most popular route for foreign entities to invest in India. This route does not require prior approval by the RBI or the government. 

The government does allow up to 100% foreign direct investment in non-critical areas, so security clearance is not required from the Ministry of Home Affairs.

Government Route – The Ministry of Finance and Foreign Investment Promotion Board (FIPB) require approval for certain sectors.

Also Read: FDI jumps 13% in India for FY20, records growth from FY19

Both the central government and state governments have undertaken various programs to increase FDI and make the country a desirable destination for FDI. 

The country is also relaxing restrictions in various sectors, including the defense, insurance sector, and telecoms. 

Since its inception, the government’s flagship initiative, “Make in India”, has made significant progress. It aims to facilitate investment, foster innovation and achieve modern infrastructure.

Recent government initiatives like PM Gati Shakthi and single window clearance have helped to reduce red tape while increasing FDI flows in the country. 

India’s Space Activities Bill is currently being considered. It will be a separate legislation in India in the space field and further define the scope for FDI in India’s space sector.