India’s domestic economic recovery in FY 2021-22 boosted import demand while India’s external sector remained resilient and safe-haven demand for gold expanded the trade deficit from October 2021 to March 2022 time period. But strong capital inflows, dominated by strong exports and foreign direct investment (FDI), eased the pressure on the current account balance.
In the financial year 2021-22, India’s merchandise exports grew by 34.7 percent and imports by 28.9 percent as compared to pre-pandemic levels, and both India’s exports and imports to historically high levels.
According to exchange data, Foreign Institutional Investors (FIIs) after making net purchases from April 2021 to September 2021, gradually withdrew from the equity segment from October 2021 onwards. FIIs sold Rs 275,000 crore in the Indian market from January 2022 to May 2022 but net FDI in the major components of financial inflows remained strong.
Indian Ministry of Commerce and Industry said that India expects an FDI of $100 billion in the current financial year (i.e. FY23). Under the Government of India’s “Make in India” vision, several new policies and further relaxation of FDI policy norms resulted in a gross inward FDI of US$ 83.6 billion in 2021-22 at its level a year ago.
FDI inflow in India
| Financial Year | Amount |
|---|---|
| 2018-19 | 62 billion US$ |
| 2019-20 | 74.39 billion US$ |
| 2020-21 | 81.97 billion US$ |
| 2021-22 | 83.6 billion US$ |
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According to government data, the top FDI investor countries in India were Singapore, the USA, Mauritius, the Netherlands, and Switzerland which contributed 76 percent of the total FDI equity in the financial year 2021-22. In which services sector, including technology and financial services, constitutes a major part of the FDI equity.
Looking at the data, there was high foreign direct investment from India mainly to destinations like Singapore, the US, the UK, Mauritius, the Netherlands, and the Philippines in the financial year 2021-22.
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