Page 42 - BANKING FINANCE MARCH 2024

ARTICLE

About 50% of respondents see India amongst the top three the USA at 9%, (US$ 61.26 billion), Netherlands at 7%, (US$
economies or leading manufacturing destinations of the 45.28 billion) and Japan at 6%, (US$ 39.94 billion).The state
world by 2025. The respondents have pinned down market that received the highest FDI during April 2000-June 2023 was
potential, skilled workforce, and political stability as the top Maharashtra (US$ 58.43 billion) at 29%, followed by
three reasons to make India their favored destination. Karnataka (US$ 45.92 billion) at 23%, Gujarat (US$ 32.63
billion) (16%), Delhi (US$ 27.06 billion) (14%), and Tamil Nadu
It seems highly probable that we will see a surge in consumer (US$ 9.13 billion) (5%).In 2022 India received 811 Industrial
spending, with a high rate of the population falling under age Investment Proposals which were valued at Rs. 352,697 crore
group between 15-59 years and being considered as a second (US$ 42.78 billion). Cumulatively, the total amount of Industrial
largest populated country. A point to consider is that youth and investment proposals for 2022 increased to US$ 298 billion
elite consumers had an inclination towards brands and multi- (Rs. 23.6 lakh crore) as compared to US$ 169.5 billion (Rs.
brand supermarkets, whereas older generation and non- 13.8 lakh core) in the previous year.
taxpayers preferred buying from convenience stores, discount
stores. Economic betterment is considered to be due to the Government Initiatives
liberalization of the FDI policies and rigid licensing systems. The In recent years, India has become an attractive destination
retail sector is backbone of Indian economy and one of the for FDI because of favorable government policies. India has
fastest growing sectors.
developed various schemes and policies that have helped
boost India's FDI. These schemes have prompted India's FDI
Market size investment, especially in upcoming sectors such as defense
India has become an attractive destination for FDI in recent manufacturing, real estate, and research and development.
years, influenced by various factors which have boosted FDI. Some of the major government initiatives are:
India ranked 40th in the World Competitive Index 2023 Due to the Make in India Initiative, FDI equity inflow in
jumping 3 positions from the 43rd rank in 2021. India was the manufacturing sector between 2014-2022 has
also named as the 48th most innovative country among the increased by 57% over the previous 8 years i.e. 2006-
top 50 countries, securing 40th position out of 132 2014.
economies in the Global Innovation Index 2023. India rose The Reserve Bank of India has taken a number of
from 81st position in 2015 to 40th position in 2023. These actions to increase foreign exchange inflows. These
factors have boosted FDI investments in India. India's FDI actions consist of:
inflows have increased 20 times from 2000-01 to 2023-24. Exempting additional Foreign Currency Non-
According to the Department for Promotion of Industry and
Resident (Bank) [FCNR(B)] and Non-Resident
Internal Trade (DPIIT), India's cumulative FDI inflow stood (External) Rupee (NRE) deposits from Cash Reserve
at US$ 937.58 billion between April 2000- June 2023, mainly
Ratio (CRR) and Statutory Liquidity Ratio (SLR).
due to the government's efforts to improve the ease of
doing business and relax FDI norms. Authorization for banks to accept new FCNR(B) and
NRE deposits without regard to current interest
The total FDI inflow into India from April 2023 to June 2023 rate regulations until the end of October 2022.
stood at US$ 17.56 billion and FDI equity inflow for the same
period stood at US$ 10.94 billion. From April 2000-June 2023,
India's service sector attracted the highest FDI equity inflow
of 16% amounting to US$ 105.40 billion, followed by the
computer software and hardware industry at 15%,
amounting to US$ 95.88 billion, trading at 6%, US$ 40.05
billion, telecommunications at 6%, US$ 39.27 billion and
automobile industry at 5%, US$ 35.14 billion.

India also had major FDI inflows during April 2000-June 2023,
coming from Mauritius at US$ 164.83 billion with a total share
of 26%, followed by Singapore at 23% (US$ 151.16 billion),

BANKING FINANCE | MARCH | 2024 | 39