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Trends and Patterns of FDI Inflows in India

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Trends and Patterns of FDI Inflows in India

Dr. ANUJ GOEL Dr. PREETI GARG MEGHA JAIN
Associate Professor Assistant Professor Research Scholar
School of Business Studies School of Business Studies Shobhit University,
Shobhit Institute of Engineering & Technology, Shobhit Institute of Engineering & Technology, Gangoh
(Deemed- to- be- University), Meerut (Deemed- to- be- University), Meerut

ABSTRACT
Foreign investment is an important economic process during which foreign state and private companies and
enterprises invest capital, technology and innovations into the companies of another country. Foreign Investment in
India is governed by the FDI policy announced by the Government of India and the provision of the Foreign
Exchange Management Act (FEMA) 1999. The historical background of FDI in India can be traced back with the
establishment of East India Company of Britain. British capital came to India during the colonial era of Britain in
India. Over the past fifteen years, countries have regarded FDI increasingly as contributing to their development
strategies for the technology and capital it provides. Investment policies have become more liberal at the national
and regional level, but there is no comprehensive framework at the multilateral level. Some home countries are also
increasingly facilitating FDI into developing countries using guarantee funds, matchmaking and other measures. An
analysis of the last nineteen years of trends in FDI inflows shows that there has been a steady flow of FDI in the
country up to 2004, but there is an exponential rise in the FDI inflows from 2005 onwards. The increase in FDI in
India has coincided with the government’s ability to change to a market-oriented economy. By opening its economy
to international trade, India has seen a rise in the number of multinational corporations that have moved their
operations from their home country. An analysis of the last nineteen years of trends in FDI inflows shows that there
has been a steady flow of FDI in the country up to 2004, but there is an exponential rise in the FDI inflows from
2005 onwards. From last six financial years 2013-14 and 2014-15 and so on the growth of FDI inflows is much
higher. As per international best practices the total FDI flows in 2000-01 is 4,029 US $ Million which is increased
to 64,375 US $ Million in 2018-19. The Cumulative Total of FDI from April 2000 to March 2019 is 609,838 US $
Million. As per Department of Industrial Policy and Promotion (DIPP’S) FDI Data Base Equity Capital
components only the total FDI flows in 2000-01 is 2,463 US $ Million which is increased to 44,366 US $ Million in
2018-19. The Cumulative Total of FDI from April 2000 to March 2019 is 420,142 US $ Million.

Key Words: Foreign Investment, FDI, Foreign Exchange Management Act, FDI Inflows, Department of Industrial
Policy and Promotion

INTRODUCTION
Foreign Direct Investment (FDI) has been recognized as an important driver for economic growth and development.
One of the most striking developments during the last two decades is the spectacular growth of FDI in the global
economic landscape. This unprecedented growth of global FDI in 1990 around the world make FDI an important
and vital component of development strategy in both developed and developing nations and policies are designed in
order to stimulate inward flows. In fact, FDI provides a win – win situation to the host and the home countries. Both
countries are directly interested in inviting FDI, because they benefit a lot from such type of investment. The home
countries want to take the advantage of the vast markets opened by industrial growth. On the other hand the host
countries want to acquire technological and managerial skills and supplement domestic Savings and foreign
exchange. Moreover, the paucity of all types of resources viz. financial, capital, entrepreneurship, technological
know- how, skills and practices, access to markets- abroad- in their economic development, developing nations
accepted FDI as a sole visible panacea for all their scarcities. Further, the integration of global financial markets
paves ways to this explosive growth of FDI around the globe.
The historical background of FDI in India can be traced back with the establishment of East India Company of
Britain. British capital came to India during the colonial era of Britain in India. Before independence major amount
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of FDI came from the British companies. British companies setup their units in mining sector and in those sectors
that suits their own economic and business interest. After Second World War, Japanese companies entered Indian
market and enhanced their trade with India, yet U.K. remained the most dominant investor in India.
Further, after Independence issues relating to foreign capital, operations of MNCs, gained attention of the policy
makers. Keeping in mind the national interests the policy makers designed the FDI policy which aims FDI as a
medium for acquiring advanced technology and to mobilize foreign exchange resources.
The industrial policy of 1965, allowed MNCs to venture through technical collaboration in India. However, the
country faced two severe crisis in the form of foreign exchange and financial resource mobilization during the
second five year plan (1956-61).Therefore, the government adopted a liberal attitude by allowing more frequent
equity participation to foreign enterprises, and to accept equity capital in technical collaborations. The government
also provides many incentives such as tax concessions, simplification of licensing procedures and de- reserving
some industries such as drugs, aluminum, heavy electrical equipments, fertilizers, etc in order to further boost the
FDI inflows in the country. This liberal attitude of government towards foreign capital lures investors from other
advanced countries like USA, Japan, and Germany, etc. But due to significant outflow of foreign reserves in the
form of remittances of dividends, profits, royalties etc, the government has to adopt stringent foreign policy in
1970s. During this period the government adopted a selective and highly restrictive foreign policy as far as foreign
capital, type of FDI and ownerships of foreign companies was concerned. Government setup Foreign Investment
Board and enacted Foreign Exchange Regulation Act in order to regulate flow of foreign capital and FDI flow to
India.
Infact, in the early nineties, Indian economy faced severe Balance of payment crisis. Exports began to experience
serious difficulties. There was a marked increase in petroleum prices because of the gulf war. The crippling external
debts were debilitating the economy. India was left with that much amount of foreign exchange reserves which can
finance its three weeks of imports. The out flowing of foreign currency which was deposited by the Indian NRI’s
gave a further jolt to Indian economy. The overall Balance of Payment reached at Rs.(-) 4471 crores. Inflation
reached at its highest level of 13 per cent. Foreign reserves of the country stood at Rs.11416 crores. The continued
political uncertainty in the country during this period adds further to worsen the situation. As a result, India’s credit
rating fell in the international market for both short- term and long term borrowing. All these developments put the
economy at that time on the verge of default in respect of external payments liability. In this critical face of Indian
economy the then finance Minister of India Dr. Manmohan Singh with the help of World Bank and IMF introduced
the macro – economic stabilization and structural adjustment program. As a result of these reforms India open its
door to FDI inflows and adopted a more liberal foreign policy in order to restore the confidence of foreign
investors.

Further, under the new foreign investment policy Government of India constituted Foreign Investment Promotion
Board (FIPB) whose main function was to invite and facilitate foreign investment through single window system
from the Prime Minister’s Office. The foreign equity cap was raised to 51 per cent for the existing companies.
Government had allowed the use of foreign brand names for domestically produced products which was restricted
earlier. India also became the member of Multilateral Investment Guarantee Agency (MIGA) for protection of
foreign investments. Government lifted restrictions on the operations of MNCs by revising the Foreign Exchange
Regulation Act (FERA), 1973. Under the deregulated regime, FERA was consolidated and amended to introduce
the Foreign Exchange Management Act (FEMA), 1999. The new Act was less stringent and aimed at improving the
capital account management of foreign exchange in India. The act sought to facilitate external trade and payments
and to promote orderly development and maintenance of the foreign exchange market in India. It resulted in
improved access to foreign exchange. In 2012, UNCTAD survey projected India as the second most important FDI
destination after China for transnational corporations during 2010-2012. With its consistent growth performance
and abundant high-skilled manpower, India provides enormous opportunities for investment also provides a liberal,
attractive, and investor friendly investment climate.

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REVIEW OF LITERATURE

A literature review is a text written by someone to consider the critical points of current knowledge including
substantive findings as well as theoretical and methodological contributions to a particular topic. Also, a literature
review can be interpreted as review of an abstract accomplishment. Literature reviews are a staple for research in
nearly every research field. At the initial stage of the present study, a collective body of research work, related to
involved variables i.e. trends and patterns of FDI so that proper guidelines and directions from objectives,
methodologies, and findings may be sought to assist the various steps of the present study like determination of
objectives, selection of methodology and to get an understanding of relationships between different related
variables.
Pant M. (1995) in a book on “Foreign Direct Investments in India: The Issues Involved” gives some
definition of Foreign Direct Investments, a brief overview of the changing pattern of Foreign Direct Investments
(particularly in the 80s and 90s), India's foreign investment policy, policy on foreign collaborations followed during
80s, comparative assessment of foreign and domestically owned firms operating in India. Also, the issue of the
relative export orientation of foreign and domestically owned firms is dealt with the main recommendation was that
as India liberalizes its policies to compete with other Asian countries, it must look at the policies, these countries
followed to see what it can and cannot do to encourage Foreign Direct Investments.
Mathew (1998) in the book namely "Impact of Foreign Capital on the Indian Economy" has made a detailed
investigation into the effect of foreign direct investment on indigenous fiscal structure of the recipient country and
the costs and benefits involved in the process. Effects of foreign investment on the volume of domestic product,
income, employment, foreign trade and BOP have been also dealt with.
Alhijazi, Tahya Z.D (1999) in his work “Developing Countries and Foreign Direct Investment” analyzed
the pros and cons of FDI for developing countries and other interested parties. This thesis scrutinizes the regulation
of FDI as a means to balance the interests of the concerned parties, giving an assessment of the balance of interests
in some existing and potential FDI regulations. The study also highlights the case against the deregulation of FDI
and its consequences for developing countries. The study concludes by formulating regulatory FDI guidelines for
developing countries.
Ifzal A. (2003) in his studies on Foreign Direct Investments preceded by a discussion of recent trends and
the policy context for Foreign Direct Investments and a comparative syntheses of the country studies. This project
in the form of book compares and contrasts the countries experiences in order to inform policy debate and decision
making and to help guide ADB's operations.
Naga Raj R. (2003) in his article “Foreign Direct Investment in India in the 1990s: Trends and Issues”
discussed the trends in FDI in India in the 1990s and compare them with China. The study raises some issues on the
effects of the recent investments on the domestic economy. Based on the analytical discussion and comparative
experience the study concludes by suggesting a realistic foreign investment policy.
Nayak D.N. (2004) in his paper “Canadian Foreign Direct Investment in India: Some Observations”,
analyzed the patterns and trends of Canadian FDI in India. He finds out that India does not figure very much in the
investment plans of Canadian firms. He suggested some measures such as publishing of regular documents like
newsletter that would highlight opportunities in India and a detailed focus on India’s area of strength so that
Canadian firms could come forward and discuss their areas of expertise would got long way in enhancing Canadian
FDI in India.
Korhonen K. (2005) in the study reveals that the political environment of the firm in the host country may
have a special role among the other parts of the firm’s environment because of the supremacy of the host
government to use its political power in order to intervene in FDI. Therefore, the study adds the concept of
authority services to the list of TNC’s bargaining techniques. The empirical results of the study suggest that the
change in the political environment in Korea in 1998 had a clear impact on Finnish investment in Korea. The
findings indicate that repeat investments had been engaged regardless of the investment policy liberalization, but
the acquisitions had not taken place without the change in Korea’s investment policy. The results also suggest that
the modified strategy performance model can be successfully used to assess the impact of change in the firm’s
external environment.

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Singh K. (2005) in the study explored the uneven beginnings of FDI in India and examines the
developments (economic and political) relating to the trends in two sectors: industry and infrastructure. The study
concludes that the impact of the reforms in India on the policy environment for FDI presents a mixed picture. The
industrial reforms have gone far, though they need to be supplemented by more infrastructure reforms, which are a
critical missing link.
Balasubramanyam V.N & Sapsford D. (2009) in their article “Does India need a lot more FDI” compares
the levels of FDI inflows in India and China, and found that FDI in India is one tenth of that of china. The paper
also finds that India may not require increased FDI because of the structure and composition of India’s
manufacturing, service Sectors and her endowments of human capital. The optimum level of FDI, which generates
substantial spillovers, enhances learning on the job, and contributes to the growth of productivity, is likely to be
much lower in India than in other developing countries including China. Finally, they conclude that the country is
now in a position to unbundle the FDI package effectively and rely on sources other than FDI for its requirements
of capital.
Mohammed S. Ansari & Ranga M. (2010) conducted empirical analysis of status of current status
of FDI in India. The study aims to find reasons for comparatively lesser flow of FDI and suggests measures to boost
flow of FDI to India. The study was analytical in nature and made use of secondary data. The study concluded that
FDI is now regarded as one of the key indicators of economic health. They also said that FDI can complement local
development by boosting export competitiveness, employment generation and strengthening skills, transfer
diffusion-generation of technology and enhanced financial resources for development.
Chaturvedi I. (2011) analysed the sector wise distribution of FDI to know the dominating sector which has
attracted the major share of FDI in India. It also finds out the correlation between FDI and Economic Development.
The study is analytical in nature and has made use of secondary data. The relevant secondary data are collected
from various publications of Government of India, RBI and World Investment Report 2009, published by
UNCTAD. Based on the analysis, the study revealed that there is a high degree of significance between FDI and
economic development. Therefore the study concluded that FDI provides an opportunity for technology and
upgradation, access to global managerial skills and practices, optimum utilization of human capabilities and natural
resources, making industry internationally competitive, access to international goods and services and augmenting
employment opportunities.
Sirari S. Arjun & Bohra S. Narendra (2011) analyzed the significance of FDI inflows in Indian service
sector since 1991 and relating the growth of service sector FDI in generation of employment in terms of skilled and
unskilled. The study was based on secondary sources of data. The study concluded that at the sectoral level of the
Indian economy, FDI has helped to raise the output, productivity and employment in some sectors especially in
service sector.
Anitha R. (2012) analysed FDI inflow into the country during the Post Liberalization period. Further, the
trends of FDI inflow into the country are projected for a period of five years from 2010-11 to 2014-15 using
Autoregressive Integrated Moving Average (ARIMA) forecasting technique. The paper tries to examine the various
set of factors which influence the flow of FDI Identifying the causes for low inflow and suggestive remedial
measures to increase the flow of FDI in India with that of other developing nations in the world.
Vyas A.V. (2015) in the research concluded that FDI in India has a significant role in the economic growth
and development of India. FDI in India to various sectors can attain sustained economic growth and development
through creation of jobs, expansion of existing manufacturing industries. The inflow of FDI in service sectors and
construction and development sector, from April, 2000 to June, 2015 attained substantial sustained economic
growth and development through creation of jobs in India.
Thomas Asha E. (2016) research is conducted to study the relationship and analyze the impact of FDI on
Indian economy. Flow of FDI was taken for study (2000-2015). The impact was studied by testing the correlation
with the country’s GDP and Stock Market Indices. Sensex and Nifty were considered as the representative of Indian
Stock Market. The study concluded that flow of FDI in to the country plays a dominant role in deciding the stock
market movements.
Marana et al. (2017) study found that Indian economy seems to bear a down trend in its major economic
factors such as poor unemployment, low capital formulation, poor standard of living, undergrowth in GDP,
increased Trade deficit, low infrastructural developments etc. In view of the economic crisis and the shortage of
capital, the Government of India realized the importance of foreign capital for the development of the country. This
study makes use of the published data from different sources, which in research referred to as the secondary data.

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The growth of FDI in the industry is forecasted for future period from 2010 to 2015. The FDI inflow into
automobile industry is increasing in position due to huge demand in this sector.
Muthusamy, S. Sundararajan (2019) in his study found that in India the Foreign direct investment (FDI)
has received a staged improvement from instigate of the Make in India scheme, according to recent survey. There
was a incredible increase in FDI inflows (40%) particularly in manufacturing sector from October, 2014 to June,
2019. The industrial sector is considered to be the one of the dominant sectors that contributes the major Indian
GDP. India has been ranked fourteenth in the factory output in the world. This article brings out the recent efforts
taken by the government for encouraging the FDI into various sectors and how it has made a pathway. In the last
ten years India has shown a tremendous increase in Foreign Direct Investment into the various sectors in
economy. Even though Government of India has make a pathway for attracting FDI on various sectors, this
papers focuses on explaining the impact of make in India scheme on FDI.
Singh S. (2019) in her study emphasized that Indian economy is one of the top emerging markets of the
world. Five years ago it was considered as part of the fragile five, but no longer. The journey of attracting foreign
investments started way back in 1991 with New Economic policy and India has unprecentedly scaled new heights
in the level of FDI during 2000’s. The paper focuses on secondary data based Sectoral analysis of the inflow of FDI
in India from 2000 to 2018. The paper also aims to look at different facets of positive FDI spill overs in the country.
Mishra R. & Palit S. (2020) in the study found that FDI has both backward and forward linkages in
employment creation in India. FDI shows a three times increase in growth rate in the second decade than in the first
decade, i.e., during 2002 to 2012 in the service sector in India. Banking and insurance sector is the first in attracting
major FDI proposals followed by the telecommunication sector, which is in second position in attracting FDI in
India. In the service sector FDI generates highest job opportunities than any other sector in India. The result of this
study shows that employment generation in India during the last two decades is quite detectable, but FDI inflows
may not be regarded as a major factor for this growth rate.

OBJECTIVES OF THE RESEARCH

1. To analyze the trends and patterns of FDI inflows in India from 2000-01 to 2018-19 as per the International
Best Practices.
2. To analyze the trends and patterns of FDI inflows in India from 2000-01 to 2018-19 as per DIPP’S FDI
Data Base-Equity Capital components only

RESEARCH METHODOLOGY

Methodology is required for every researcher for getting the information related to the research work. Research
methodology is a way to systematically solve the research problem. It may be understood as a science of studying
how research is done scientifically. In developing a research design, the researcher has to be guided by several
factors such as objectives of the study, the hypothesis to be tested and the potentialities of the researchers. The basic
purpose of research study is to the survey is a widely used method of research and is used to develop information
based on the options and characteristics of individual in a population.

Research design is a description of procedures followed in testing the hypothesis and specification of operations for
testing of a hypothesis under a given set of conditions. It is important that an appropriate testing method should be
chosen.

The nature of the problem determines which design is most appropriate and how should be tailored to meet the
needs of investigation. The researchers used exploratory research design to study the trends and patterns of foreign
direct investment flow in India.

The researchers used various sources for collection of secondary data: reports and publications, reports of various
government organizations like Department of Industrial Policy & Promotion, Government of India, Ministry of
Commerce and Industry. The researcher used secondary to analyze the trends and patterns of foreign direct
investment flow in India (2000-2019).

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TRENDS AND PATTERNS OF FDI FLOW IN INDIA
A major change over the past two decades has been that governments have become more favourable towards FDI,
and have liberalized their FDI regime accordingly, though at different times, speeds and depths in different
countries and regions. Over the past fifteen years, countries have regarded FDI increasingly as contributing to their
development strategies for the technology and capital it provides. Investment policies have become more liberal at
the national and regional level, but there is no comprehensive framework at the multilateral level. Some home
countries are also increasingly facilitating FDI into developing countries using guarantee funds, matchmaking and
other measures.
One of the most prominent and striking feature of today’s globalised world is the exponential growth of FDI in both
developed and developing countries. In the last two decades the pace of FDI flows are rising faster than almost all
other indicators of economic activity worldwide. Developing countries, in particular, considered FDI as the safest
type of external finance as it not only supplement domestic savings, foreign reserves but promotes growth even
more through spillovers of technology, skills, increased innovative capacity, and domestic competition. FDI has
become an instrument of international economic integration.
India is the 7th largest, and the 2nd most populated country in the world. India has long been known for the
diversity of its culture, for the inclusiveness of its people and for the convergence of geography. Today, the world’s
largest democracy has come to the forefront as a global resource for industry in manufacturing and services. Its
pool of technical skills, its base of an English – speaking populace with an increasing disposable income and its
burgeoning market has all combined to enable India emerge as a viable partner to global industry. Recently,
investment opportunities in India are at a peak.
As usual, the capital flows from developed countries to developing countries. Modern world economy cannot
develop successfully without foreign investment. A great number of countries invest their funds to the economy of
other countries having a certain income and developing certain branches of industries of such countries. Due to
received capital the country receives an opportunity to renew and develop all necessary branches of industries, to
increase the effectiveness of production and produce competitive goods and services. Foreign investment is a
predominant and vital factor in influencing the global economic development. Infrastructure development has
benefitted from these enormous changes, with various sectors, including telecommunications, ports and roads,
seeing an increase in the number of projects being initiated through the involvement of foreign investors.

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Table 1: Financial Year-Wise FDI Inflows Data: As per International Best Practices (From 2000-01 to 2018-19)

FORIGEN DIRECT INVESTMENT (FDI)

FDI FLOWS INTO
EQUITY
INDIA
Financi FIPB Equity Total % age Investment
al Year Route/ Capital FDI Growth by FIIS
Re-
S.No (April RBI’S of Other Flows over Institutional
Invested
– Automat Uninco Capital previous Investors
Earnings
March) ic & rp- year (in Fund (net)
Acquisit orated US $
ion Bodies terms)
Route
FINANCIAL YEAR 2000-01 to 2018-19 (up to March, 2019), (Amount US $ Million)
1. 2000-01 2,339 61 1,350 279 4,029 - 1,847
2. 2001-02 3,904 191 1,645 390 6,130 (+) 52% 1,505
3. 2002-03 2,574 190 1,833 438 5,035 (-) 18% 377
4. 2003-04 2,197 32 1,460 633 4,322 (-) 14% 10,918
5. 2004-05 3,250 528 1,904 369 6,051 (+) 40% 8,686
6. 2005-06 5,540 435 2,760 226 8,961 (+) 48% 9,926
7. 2006-07 15,585 896 5,828 517 22,826 (+)155% 3,225
8. 2007-08 24,573 2,291 7,679 300 34,843 (+) 53% 20,328
9. 2008-09 31,364 702 9,030 777 41,873 (+) 20% (-) 15,017
10. 2009-10 25,606 1,540 8,668 1,931 37,745 (-) 10% 29,048
11. 2010-11 21,376 874 11,939 658 34,847 (-) 8% 29,422
12. 2011-12 34,833 1,022 8,206 2,495 46,556 (+) 34% 16,812
13. 2012-13 21,825 1,059 9,880 1,534 34,298 (-) 26% 27,582
14. 2013-14 24,299 975 8,978 1,794 36,046 (+) 5% 5,009
15. 2014-15 30,934 952 8,983 4,008 44,877 (+)24% 40,923
16. 2015-16 40,001 1,111 10,413 4,034 55,539 (+) 23% (-) 4016
17. 2016-17 43,478 1,223 12,343 3,176 60,220 (+) 8% 7,735
18. 2017-18 44,857 664 12,542 2,911 60,974 (+)1% 22,165
19. 2018-19 44,366 693 13,570 5,746 64,375 (+)6% (-) 3587
Cumulative
Total (From
422,900 15,465 140,016 31,457 609,838 - 212,888
April, 2000 to
March, 2019)
Source: 1. RBI’S Bulletin March, 2019 dt. 11.05.2019 (Table No. 34- FOREIGN INVESTMENT INFLOWS).

2. Inflows under the acquisition of shares in March, 2011, August 2011 & October 2011, include net FDI on account of
transfer of participating interest from Reliance Industries Ltd. to BP Exploration (Alpha).

3. RBI had included Swap of shares of US $ 3.1 billion under equity components during December 2006.

4. Data in respect of Re-invested earnings & other capital are estimated as average of previous two years.

5. Figures updated by RBI up to March, 2019. Figures are provisional.

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70

64.3
60 60.2 60.9

55.5
50
46.5
44.8
41.8
40
37.8
34.8 34.8 36
34.2
30

22.8
20

10 9
6.1 5 6.1
4 4.3
0

Figure 1: Financial Year-Wise FDI Inflows: As per International Best Practices (From 2000-01 to 2018-19)
(Amount US $ Billion & Values in Two Digits Only)
Source: Department of Industrial Policy & Promotion, Government of India, Ministry of Commerce and Industry.
(FDI Statistics- 2000-01 to 2018-19).

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Table 2: Financial Year –Wise FDI Equity Inflows: As per DIPP’S FDI Data Base-Equity Capital
components only (From 2000-01 to 2018-19)

Financial Year Amount of FDI Inflows %age Growth

S. NO.
(April- March) over previous
Financial Years 2000-01 to 2018- In Rs. In US $ year (in terms
19 (up to March, 2019) Crores million of US $)
1. 2000-01 10,733 2,463 -
2. 2001-02 18,654 4,065 (+) 65%
3. 2002-03 12,871 2,705 (-) 33%
4. 2003-04 10,064 2,188 (-) 19%
5. 2004-05 14,653 3,219 (+) 47%
6. 2005-06 24,584 5,540 (+) 72%
7. 2006-07 56,390 12,492 (+)125%
8. 2007-08 98,642 24,575 (+) 97%
9. 2008-09 142,829 31,396 (+) 28%
10. 2009-10 123,120 25,834 (-) 18%
11. 2010-11 97,320 21,383 (-) 17%
12. 2011-12 165,146 35,121 (+) 64%
13. 2012-13 121,907 22,423 (-) 36%
14. 2013-14 147,518 24,299 (+) 8%
15. 2014-15 189,107 30,931 (+) 27%
16. 2015-16 262,322 40,001 (+) 35%
17. 2016-17 291,696 43,478 (+) 9%
18. 2017-18 288,889 44,857 (+) 3%
19. 2018-19 309,867 44,366 (-) 1%
CUMULATIVE TOTAL 2,378,887 420,142 -
(From April, 2000 to March
2019)

Source: Department of Industrial Policy & Promotion, Government of India, Ministry of Commerce and Industry.
(FDI Statistics- 2000-01 to 2018-19).

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50

45 44.844.3
43.4
40 40

35 35.1
31.3 30.9
30

25 24.6 25.6
24.2
22.4
21.3
20

15
12.5
10

5 5.5
3.9
2.3 2.6 2.2 3.3
0

Figure 2: Financial Year –Wise FDI Equity Inflows (As per DIPP’S FDI Data Base-Equity Capital
components only)
(Amount US $ Billion & Values in Two Digits Only)
Source: Department of Industrial Policy & Promotion, Government of India, Ministry of Commerce and Industry.
(FDI Statistics- 2000-01 to 2018-19).

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120
64.3
60.2 60.9

100 55.5

46.5
44.8
80 41.8
37.8
34.8 36
34.8 34.2
60

Total FDI
40 22.8 Inflows
43.4 44.8 44.3
40
35.1 Equity FDI
31.3 30.9
20 9 Inflows
24.6 25.6
4
6.1 5
4.3
6.1 21.3 22.4 24.2
5.5
2.3 3.9 2.6 2.2 3.3 12.5
0

Figure 3: Financial Year –Wise FDI Inflows: From April 2000 to March 2019
(Amount US $ Billion & Values in Two Digits Only)
Source: Department of Industrial Policy & Promotion, Government of India, Ministry of Commerce and Industry.
(FDI Statistics- 2000-01 to 2018-19).

CONCLUSION
The actual FDI inflows in India is welcomed under five broad heads: (i) Foreign Investment Promotion Board’s
(FIPB) discretionary approval route for larger projects, (ii) Reserve Bank of India’s (RBI) automatic approval route,
(iii) acquisition of shares route (since 1996), (iv) RBI’s non – resident Indian (NRI’s) scheme, and (v) external
commercial borrowings (ADR/GDR) route. An analysis of the last nineteen years of trends in FDI inflows shows
that there has been a steady flow of FDI in the country up to 2004, but there is an exponential rise in the FDI
inflows from 2005 onwards. Further, the actual inflows of FDI through various routes in India are described in
Table 1, the FIPB route – represents larger projects which require bulk of inflows and account for government’s
discretionary approval. Although, the share of FIPB route is declining somewhat as compared to RBI’s automatic
route and acquisition of existing shares route. The increase in FDI inflows during 2008 is due to increased
economic growth and sustained developmental process of the country. From last six financial years 2013-14 and
2014-15 and so on the growth of FDI inflows is much higher. As per international best practices the total FDI flows
in 2000-01 is 4,029 US $ Million which is increased to 64,375 US $ Million in 2018-19. The Cumulative Total of
FDI from April 2000 to March 2019 is 609,838 US $ Million. As per DIPP’S FDI Data Base Equity Capital
components only the total FDI flows in 2000-01 is 2,463 US $ Million which is increased to 44,366 US $ Million in
2018-19. The Cumulative Total of FDI from April 2000 to March 2019 is 420,142 US $ Million.

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