FDI into manufacturing sector down 18% in FY24: RBI Annual Report

The drop in financial services was much more prominent, with FDI inflows of only $4.4 billion, a decline of 35% over the previous year.
Reserve Bank of India
Reserve Bank of India FILE Photo | PTI

MUMBAI: Despite all government efforts to spruce up the manufacturing sector in the country, FDI inflows into the sector continue to decline after peaking in 2021–22.

The foreign direct investment (FDI) inflows into the manufacturing sector in FY24 is one of the lowest in the past five years, according to the provisional FDI data published in the RBI annual report.

Manufacturing sectors received $9.3 billion FDI in FY24, which is 17.7% less than the $ 11.3 billion inflows in FY23.  In FY22, the manufacturing sector received $16.3 billion in FDI.

FDI inflows across sectors have seen a decline in FY24.

Computer services received $4.9 billion during the financial year, compared to $5.6 billion in FY23. The drop in financial services was much more prominent, with FDI inflows of only $4.4 billion, a decline of 35% over the previous year.

Retail and trade saw a 22.7% decline in FY24 at $4.1 billion. The drop in FDI inflows in communication services was 17.8% in FY24. However, FDI inflows in electricity transmission and generation saw a two-thirds increase from $3.3 billion in FY23 to $5.5 billion in FY24.

The total FDI inflow in FY24 dropped from $46 billion in FY23 to $44.4 billion in FY24.

Singapore remained the biggest source of FDI into India, with $11.8 billion in FY24. However, it is $5.4 billion lower than the previous year.

FDI inflows from Mauritius saw an increase 31% in FY24 to $8 billion. Ever since the new tax treaty with Mauritius came into force from April 1, 2017, taking away several tax benefits, investors shifted their base to Singapore and channelled FDIs into India.

The US with $5 billion and Netherlands with $4.9 billion were the other major contributors to FDI in India. FDI inflows from Japan shot up from $1.8 billion in FY23 to $3.2 billion in FY24. UAE contributed $2.9 billion in FY24, down from $3.4 billion in FY23.

Reserve Bank of India
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