Foreign direct investment (FDI) in India surged by 26.4 per cent, reaching $22.4 billion, during the period from April to June, reflecting the strongest growth in over five quarters. Key sectors such as manufacturing, financial services, communication, and energy drew significant interest, with Singapore, the US, Mauritius, and Belgium among the top contributors.
Net foreign direct investment (FDI) in April to June of the current fiscal year (FY 2024-25) reached $6.9 billion, up from $4.7 billion during the same period the previous year, as per the Reserve Bank of India's latest report. This rise was fueled by a 26.4 per cent year-on-year growth in gross inward FDI, which totaled $22.5 billion in Q1 of 2024-25.
Despite the overall decline in FDI over the past two years, gross inflows had already shown a 23 per cent increase in the prior quarter, supported by strengthening global cross-border investments. In June, FDI inflows rose by 37.6 per cent, though this was lower than the 49 per cent increase observed in the previous month.
The RBI’s bulletin noted that about 80 per cent of these FDI inflows went into the manufacturing, financial services, communications, and energy sectors, with Singapore, Mauritius, the Netherlands, the US, and Belgium being the leading source countries, contributing around 75 per cent of the inflows. Equity investments, which grew by 46 per cent in the first quarter to $16.5 billion, were a key driver, with $4.2 billion directed towards share acquisitions -2.5 times more than in the same period of 2023.
This trend bolsters India’s aspirations to establish itself as a top destination for foreign investments, particularly as global companies aim to reduce reliance on China. Global cross-border investment announcements totaled $635 billion in the first half of 2024, with the renewable energy, semiconductors, and communications sectors accounting for half of these investments.
