Government Releases Data on “FDI Inflows in India 2020-21”

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The Government releases data regarding the Foreign Direct Investment – FDI inflows in India from April to January 2021.

FDI inflows in India from April 2020 to January 2021:
  • India attracted a total FDI inflow of US$ 72.12 billion from April to January 2021.
    • Significance: It is the highest ever for the first ten months of a financial year. Further, it is 15% higher than the similar FDI inflow of 2019-20 (US$ 62.72 billion).
  • Top Investor Countries: Singapore is the top FDI investor. It is followed by the USA and UAE.
  • Sectors: Computer Software & Hardware emerges as the top sector with 45.81% of the total FDI equity inflow. This is followed by Construction (Infrastructure) Activities (13.37%) and Services Sector (7.80%) respectively.
About Foreign Direct Investment(FDI):
  • FDI is the category of international investment. It reflects the objective of obtaining a lasting interest from a resident entity in one economy to an enterprise in another economy.
  • Further, the lasting interest implies the existence of a long-term relationship between the direct investor and the enterprise. This has a significant degree of influence on the management of the enterprise.

Components: FDI consists of three components:

  • Firstly, Equity capital: It is the FDI purchase of shares of an enterprise in a country other than its own.
  • Secondly, Reinvested earnings: It comprises the direct investors’ share (in proportion to direct equity participation) of earnings not distributed. Such retained profits by affiliates are reinvested.
    Note: The earnings of the share are distributed to the investor in the form of dividends by affiliates, or earnings not remitted.
  • Thirdly, Intra-company loans or intra-company debt transactions: It refers to short- or long-term borrowing and lending of funds between direct investors (or enterprises) and affiliate enterprises.

Source: PIB

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