India's foreign investment inflows rise to $83.6 billion in FY22

Foreign direct investment FDI has been rising annually, compared to the heavy selling of foreign portfolio investors FPIs in recent times. In FY 22, the gross FDI inflows were $83.6 billion, surpassing $82 billion a year earlier. It stood at $74.4 billion in FY 20. In the month of February, the RBI said that services and manufacturing sectors accounted for a major share of the FDI. Net FDI decreased to $39.3bn in FY 22 from $44bn a year ago due to higher outward investment by Indian entrepreneurs and repatriation by foreign investors, RBI said. India's cumulative FDI stands at around $570 billion. FDI investments usually look at the long-term potential of a country and are rarely withdrawn. The high flow of FDI shows that India is a bright destination for foreign investment, said Chief Economist Madan Sabnavis. The potential is in several sectors, such as IT, finance, FMCG, auto, drugs, telecom, etc. Companies that seek JVs or take up stakes in domestic companies usually make investments in these types of investments. They could be VC funds that support startups here. Since the long-term view, FDI investors are not present in the trading segment. Over two-fifth of the 1,200 global business leaders surveyed in the US, UK, Japan and Singapore plan to make additional or first-time investments in India, according to a report last year by Deloitte. Since the US Federal Reserve began winding up purchases of treasury bonds and mortgage backed securities it had been making to support the economy during the Pandemic, FPIs have been withdrawing. The surge in commodity prices has resulted in a tighter monetary situation due to policy rate hikes and the withdrawal of investment by portfolio investors, as a result of the inflation sparked by the Russia-Ukraine conflict. FPIs have pulled out $21.3 billion in 2022 so far. India's foreign exchange reserves fell to $596 billion at the end of May 6, from a record of $642.453 billion on September 3 last year, as the Reserve Bank of India RBI sold dollars from reserves to arrest the speed of the rupee's depreciation and to quell foreign exchange volatility.