In the first quarter, FDI inflow to India increased by 26%.
According to the RBI’s most recent monthly bulletin, gross foreign direct investment (FDI) into the Indian economy increased by 26.4% to $22.5 billion during the April–June quarter of the current financial year compared to the same quarter of the previous year.
According to the research, as a result, net foreign direct investment (FDI) increased to $6.9 billion in the first quarter of 2024–25, from $4.7 billion in the same period in 2023–24.
Approximately 80% of the total foreign direct investment inflows were accounted for by the manufacturing, financial services, computer, communication, and energy sectors.
According to the RBI study, the main sources of foreign direct investment (FDI) are Singapore, Mauritius, the Netherlands, the US, and Belgium, together accounting for up to 75% of the FDI.
From $28 billion in the prior year to $9.8 billion in 2023–24, there was a significant decline in net FDI flow. Net FDI inflows into the nation was $38.6 billion in FY22.
Regarding the performance of the nation’s foreign sector, the report is optimistic.
After declining in 2023–2024, outbound shipments from India are currently experiencing an expansion in 2024–2025, suggesting that net exports may be on the verge of recovering as a growth lever for the nation.
The report highlights that, aside from China, nine out of the top ten destinations that account for approximately half of India’s total export value are experiencing increasing demand.
Additionally, India’s export basket is shifting towards electronics and engineering goods, while traditional products like gems and jewellery, textiles, garments, leather products, and marine products are becoming less competitive.
According to the research, global competence centers are directing the export drive’s future developments, such as how business and knowledge process outsourcing will advance.
The report also states that business services—which include consulting, engineering, research, and design—are quickly overtaking software and information technology as India’s top export industries.
India’s foreign exchange reserves hit a record high of $675 billion as of August 2, 2024, according to RBI Governor Shaktikanta Das, who made this announcement earlier this month. Overall, India’s external sector is still strong, with key indicators showing further improvement.
“We are still optimistic that we will be able to easily meet our external financing requirements,” Das stated.
Additionally, he stated that strong services and remittance receipts together with a smaller trade deficit were the main reasons for India’s current account deficit (CAD), which decreased from 2.0 percent of GDP in 2022–2023 to 0.7% in 2023–2024. According to him, the merchandise trade deficit increased in Q1:2024–2025 as imports increased more quickly than exports.
The head of the RBI went on to say that high remittance inflows and a thriving services export sector should keep the CAD in a sustainable range in Q1:2024–2025.
