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Net FDI into India declines to $2.99 billion in April-August: RBI data

The net Foreign Direct Investment (FDI) in India, declined sharply in April-August 2023 to $2.99 billion from $18.03 billion in April-August 2022 due to moderation in global investment activity and a rise in repatriation.

Reserve Bank of India‘s data (October 2023 bulletin) said FDI in India was $7.28 billion and FDI by India, that is, money invested abroad from the country, was $4.28 billion in April-August 2023. As for 2022, FDI in India was $22.79 billion and FDI by India was $4.76 billion in April-August 2022.

The repatriation/disinvestment, by those who made direct investments in India, rose to $19.63 billion in the first five months of the current financial year (FY24) from $11.41 billion in April-August 2022, Reserve Bank of India data showed.

Reserve Bank of India, in its Monetary Policy Report issued along with the Monetary Policy Review (October 2023), said that looking ahead, the ‘higher for longer’ interest rate scenario in the US and other advanced economies (AEs) could keep risk aversion towards emerging market economies (EMEs) assets elevated and impinge upon capital flows. Global foreign direct investment flows are also slowing.

Global deals involving mergers and acquisitions are languishing at a 10-year low as high interest rates chill activity in equity markets. This has adverse implications for the global Foreign Direct Investment (FDI) cycle, already in a slump, as Reserve Bank of India’s State of Economy report (issued on October 19, 2023) pointed out.

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