India’s foreign direct investment to gross domestic product ratio eased to 2.7% in fiscal year ending March. 31, 2022 from 3.1% in the previous financial year, according to government data.
The FDI to GDP ratio, which is a metric that compares a country’s fund inflows as compared to its gross domestic product, was at 2.3% in fiscal 2018, Minister of Commerce and Industry Som Parkash informed the Lok Sabha, citing government data.
The government does not fix targets for FDI inflows as it is largely a matter of commercial business decisions, Parkash said in reply to a question about whether it is true that the central government has not achieved its foreign direct investments target.
“FDI inflows into a country depends on a host of factors such as availability of natural resources, market size, infrastructure, political and general investment climate as well as the macro-economic stability and investment decision of foreign investors,” he said.
The government has in recent years implemented investor-friendly policy, wherein most sectors, except certain strategically important sectors, were opened for 100% FDI under the automatic route.
“Changes are made in the policy after having consultations with stakeholders including apex industry chambers, associations, representatives of industries/groups and other organizations. In the recent past, reforms in the FDI policy have been undertaken in sectors such as Insurance, Petroleum & Natural Gas and Telecom,” the minister said.
Foreign direct investment (FDI) is a type of investment wherein an investor from one country establishes or significantly influences a business entity in another economy.