At the same time, the Net FDI inflows moderated to $0.4 billion in 2024-25 on account of rise in repatriation signaling maturing of market allowing foreign investors to enter/exit smoothly.
- Further in 2024-25, Foreign Portfolio Investment (FPI) dropped to $1.7 billion, as investors booked profits in equities.
About FDI
- FDI: It is the investment through equity instruments by a person resident outside India in an unlisted Indian company; or in 10% or more of the post issue paid-up equity capital on a fully diluted basis of a listed Indian company (For FPI, this limit is less than 10%).
- It involves companies’ bringing in knowledge, skills, technology and taking control over ownership in a business entity.
- Gross and Net FDI
- Gross FDI: Total investment made by foreign entities directly into the productive assets of India.
- Net FDI: Difference between inward FDI flows and outward FDI flows (Repatriation by foreign firms + Outward FDI by Indian firms).
Key Reasons for Rising FDI in India
- Investor-Friendly Policy Regime: Allowing 100% FDI through the automatic route in most sectors, flagship reforms like GST Rollout, National Logistics Policy, etc.
- Sectoral Appeal: Services (finance and IT to R&D and consultancy) along with resurgence of manufacturing through Production Linked Incentive (PLI) schemes.
- Sub-National Reforms: In the States through infrastructure readiness, investor outreach, industrial policy reforms, etc.
Key FDI trends in India
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