This week India has crossed a major milestone as the top global investment destination. Latest data shows that foreign direct investment in India has crossed the one trillion dollar mark since the turn of the century, which shows how India has been a destination of choice for foreign investors.
Data released by the Department for Promotion of Industry and Internal Trade or DPIIT showed that the cumulative amount of FDI, including equity, reinvested earnings and other capital, stood at US$1,033.40 billion (or $1 trillion) between April 2000 and September 2024.
To get a perspective of how huge a trillion dollars really is, let’s take this simple example – if a person had to earn one dollar (Rs. 84) per second (i.e. a trillion dollars in a trillion seconds) – then he It would take a person 11.5 days to earn one million dollars. But this is where it gets interesting. Continuing to earn a dollar per second, it would take a person 31.7 years to reach the billion-dollar mark, and a staggering 31,709 years to reach the trillion-dollar mark.
Another suggestive way of looking at this is that India, the fifth largest global economy, has a total GDP of about $3.89 trillion in 2024. It used to be around $2 trillion in 2014. Now compare this with FDI inflows of $1 trillion over the last two decades.
Source of FDI
So, where did all this investment come from? Which are the countries from where this investment came? One can assume that the top spot will either be the US, which is the world’s largest economy, or perhaps China, which is the second largest economy globally. But it is nothing like that.
The largest contributor to FDI into India during this period was Mauritius – a whopping 25 per cent of all FDI inflows came through this route. Mauritius was followed by Singapore with 24 percent. The United States came in third with 10 percent.
Other countries that have made significant investments in India include Netherlands 7 per cent, Japan 6 per cent, UK 5 per cent, UAE 3 per cent and Cayman Islands, Germany and Cyprus each contributing 2 per cent. Everyone.
Areas that saw major investment
The sector that saw the highest investment was the services and allied sector. Significant investment took place in computer software and hardware, telecommunications, trading, construction, infrastructure development, automobiles, chemicals and pharmaceuticals.
FDI inflows are increasing
Of the $1,033 billion, $667.4 billion came in the last ten years between 2014 and 2024, representing a 119 percent increase in investment compared to the previous decade. The data also showed that FDI inflows have occurred in about 60 sectors across 31 states and union territories of India.
India has also liberalized and attractive its investment policies to attract more investment over time. The reforms have resulted in 100 per cent FDI under the automatic route in most sectors except those of strategic importance.
Giving impetus to the ‘Make in India’ initiative, the manufacturing sector has seen a growth of 69 per cent in FDI in the last ten years compared to the previous decade.
Which sectors are open and what is the process
FDI is permitted through the automatic route in most sectors, while sectors such as telecommunications, media, pharmaceuticals and insurance require government approval for foreign investors.
Under the government approval route, a foreign investor is required to obtain prior approval from the concerned ministry or department, while under the automatic route, a foreign investor is only required to inform the Reserve Bank of India (RBI) after the investment. ,
At present there is a ban on FDI in some areas. They are lotteries, gambling and betting, chit funds, nidhi companies, real estate business and manufacturing of cigars, cheroots, cigarillos and cigarettes using tobacco.
(Inputs from PTI)