Other countries have also been hit, with China reporting a2.7% decline, although some, such as, Indonesia have bucked the trend so far in 2023. For the last few months. FDI inflows to India have remained depressed, with 2022-23 being the first time in nearly a decade when overseas direct investments into the country declined.
Data released by the department for promotion of industry and internal trade (DPIIT) showed that barring construction, which included building housing and townships, all major sectors saw a dip (see graphic) . The Netherlands and Japan were the only countries that saw an increase in inflows.
DPIIT data showed that Maharashtra remained the top destination with equity in flows of $4.5 billion in the June quarter, as against $5.2 billon, marking a decline of 13.5%.
Karnataka saw a 46% fall to just under $1.5 billion during this period. Gujarat saw a 77% slump from $3.2 billion to $730 million. Despite a 1.9% decline to $1.9 billion, Delhi emerged as the second largest destination for FDI equity flows.
RBI data released earlier this month estimated a 28% fall in gross FDI inflows to $17.6 billion during the first quarter of the fiscal as companies held back investments amid the global slowdown. Multinational companies also stepped up repatriation of equity or disinvestment, which added up to $10.4 billion in the June quarter, compared with $6.2 billion a year ago, RBI data showed.
As a result, in April-June, 2023, direct investment into India declined 56% to $7.1 billion, RBI numbers showed. Net FDI, which includes overseas investment by Indian companies, declined 63% to $5 billion.