Indian Economy
Rise in Foreign Direct Investment
- 29 May 2020
- 2 min read
Why in News
According to data released by the Department for Promotion of Industry and Internal Trade (DPIIT), total Foreign Direct Investment (FDI) in India increased by 18% to $73.46 billion in the 2019-20 financial year.
- DPIIT is under the Ministry of Commerce and Industry.
Key Points
- Total FDI has doubled from the year 2013-14 when it was only $36 billion.
- The total investment by Foreign Institutional Investors was $247 million.
- The sectors that attracted the most foreign inflows during 2019-20 included services, computer software and hardware, telecommunications, trading and automobiles.
- Singapore emerged as the largest equity FDI source, contributing to inflows of $14.67.
- The inflows have been attributed to the government’s Make in India programme.
Foreign Direct Investment
- FDI is an investment made by a firm or individual in one country into business interests located in another country.
- Generally, FDI takes place when an investor establishes foreign business operations or acquires foreign business assets, including establishing ownership or controlling interest in a foreign company.
- It is different from Foreign Portfolio Investment where the foreign entity merely buys equity shares of a company. FPI does not provide the investor with control over the business.
- Routes through which India gets FDI:
- Automatic Route: In this, the foreign entity does not require the prior approval of the government or the RBI.
- Government route: In this, the foreign entity has to take the approval of the government.
- The Foreign Investment Facilitation Portal (FIFP) facilitates the single window clearance of applications which are through approval route.
- This portal is administered by the Department for Promotion of Industry and Internal Trade (DPIIT).
