India attracted the highest ever foreign direct investment (FDI) in the financial year (FY) ended March 2021 totaling USD 81.72 billion, despite the weakened economy due to the COVID-19 pandemic.
This is 10% more than the USD 74.39 billion of FDI India received in the previous financial year, although India’s GDP is estimated to contract by 8% in FY 2020-21 compared to 4% growth in FY 2019-20.
“Measures taken by the government on the fronts of FDI policy reforms, investment facilitation, and ease of doing business have resulted in increased FDI inflows into the country,” said the Ministry of Commerce and Industry in a recent statement.
The FDI in equity grew by 19% in the FY 2020-21 to reach USD 59.64 billion, compared to USD 49.98 billion a year ago. This increase can also be partly attributed to global investors’ growing appetite for the Indian technology sector at a time when the world’s second-most populous country is witnessing rapid digital adoption.
Computer software and hardware has emerged as the top sector in FY 2020-21 with around 44% share of the total FDI equity inflow, followed by construction (infrastructure) activities (13%) and the services sector (8%), the release said.
Gujarat was the top recipient state with a 37% share of the total FDI equity inflows in FY 2020-21, followed by Maharashtra (27%) and Karnataka (13%). About 94% of the FDI equity inflow in Gujarat was in computer software and hardware.
In terms of top investor countries, Singapore was at the apex, contributing 29% of the total FDI in FY 2020-21. It was followed by the US and Mauritius, which attributed 23% and 9% of the inflow.
Saudi Arabia was the top investor in terms of the highest percentage increase in investments. It pumped in USD 2.8 billion in FDI in India in FY 2020-21, compared to USD 89.93 million reported in the previous financial year.
The total FDI growth can also be partly attributed to two funding sprees by Reliance Industries, India’s largest conglomerate by market cap last year.
Owned by Mukesh Ambani, Asia’s richest person, Reliance raised USD 20.2 billion for its digital arm Jio Platforms by selling its 30% stake to 13 high-profile global investors between April and July 2020. The list of its backers includes tech giants Google, Facebook, Qualcomm, and Intel; private equity heavyweights Silver Lake, Vista Equity Partners, General Atlantic, and KKR & Co; and sovereign funds from the Middle East like Abu Dhabi Investment Authority and Public Investment Fund of Saudi Arabia.
Barely two months after closing the high-profile fundraising for Jio Platforms, Reliance kicked off another fundraising spree for its retail business, Reliance Retail. Between September and November 2020, Reliance sold a 10.09% stake in Reliance Retail for USD 6.4 billion.