New Delhi, Mar 7 (KNN) Foreign direct equity (FDI) inflows into India contracted by 21 per cent year-on-year to USD 41.31 billion in 2023, according to data released by the Department for Promotion of Industry and Internal Trade (DPIIT). 

The sustained contraction in FDI inflows to India reflects various factors contributing to the cautious investor sentiment. High inflation rates and a slowdown in developed countries have significantly impacted investor confidence, leading to a decline in overseas investments flowing into the country.

While the Indian government has not officially commented on the reasons behind the FDI dip, industry analysts suggest that addressing policy uncertainties and streamlining regulations could be crucial in attracting renewed investor interest.

“India remains a promising market with a large and growing consumer base,” said an industry expert. “However, it is essential to create a stable and predictable policy environment to ensure continued foreign investment and support economic growth,” he added.

The decline in FDI comes despite India's recent efforts to improve its ease of doing business ranking and attract foreign capital. The government has implemented various initiatives, including addressing regulatory bottlenecks, streamlining bureaucratic procedures, and offering incentives to encourage foreign investment inflows.

The coming months will be crucial in observing how the Indian government responds to this downward trend and whether it can implement effective measures to reverse the decline in FDI inflows.

(KNN Bureau)