26th June 2025 (28 Topics)
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Decline in FDI Inflow
Context
According to the UNCTAD World Investment Report 2025, FDI inflows to India declined by 1.8% in 2024, signaling a reduced role of foreign investment in India’s development and capital formation.
Key Highlights:
- FDI made up just 3% of India’s total capital formation in 2024, down from 8.8% in 2020, reflecting a steep decline in foreign investment’s contribution to India’s development financing.
- India attracted USD 27.6 billion in FDI in 2024 — nearly half of what it received in 2020 and 8% lower than 2023 levels.
- The cumulative stock of FDI in India was 14% of GDP in 2024, down from 9% in 2020.
- Domestic sources have filled the gap. Capital formation from non-FDI sources has remained strong, especially in sectors like semiconductors and metals.
- India received 80% of South Asia’s FDI, showing continued investor interest relative to its neighbours.
- India saw capital expenditure projections increase by over 25%, reaching USD 110 billion, nearly one-third of all such projections in Asia.
Foreign Direct Investment (FDI)
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