Chennai: The flow of foreign direct investment (FDI) into India is dropping and may suffer its first full-year decline since Prime Minister Narendra Modi came to power in 2014, reports state.
Inbound foreign direct investment (FDI) dropped seven per cent to $33.5 billion in the nine months between April and December 2018, compared with $36 billion in the year-earlier period, according to figures released over the weekend, reports said.
The reversal may indicate that investors are being deterred by the government’s recent protectionist policies and uncertainty about this year’s general election result.
According to the report by Reuters, there is also concern among some foreign businesses about the Modi government’s increasingly protectionist tilt. That was illustrated by moves at the beginning of this month to tighten rules on the ways that big foreign-controlled online retailers Amazon and Flipkart, which is controlled by giant US retailer Walmart, are allowed to operate.
Walmart last year invested $16 billion in buying 77 per cent of Flipkart. It is unclear how much of that deal is reflected in the latest FDI data.
The FDI figures, which haven’t been produced for about six months and have elicited little attention as they were released without fanfare over the weekend, exclude reinvestment of profits by foreign companies already in India as well as new investment through the capital markets, said the report.
The top sources for the FDI were Singapore, with $13 billion, Mauritius $6 billion, Japan $2.2 billion and Britain with $1.1 billion. Mauritius is often used by Indians living overseas and Indian companies to route money into or out of India.
The growth of FDI inflows has been dropping dramatically since recording a 35 per cent rise in the fiscal year to 31 March, 2016. By last fiscal year, ending 31 March, 2018, FDI growth had slowed to just three per cent.