Foreign direct investment (FDI) inflow to India fell 15% to $74.01 billion in the calendar year 2021 compared with $87.55 billion in 2020.
The total FDI includes equity inflow, equity capital of unincorporated bodies, re-invested earnings and other capital.
"FDI is largely a matter of commercial business decisions and FDI inflow depends on a host of factors such as availability of natural resource, market size, infrastructure, political and general investment climate as well as macro-economic stability and investment decision of foreign investors," Minister of State in the Ministry of Commerce and Industry Som Parkash said in a written reply in the Lok Sabha.
To promote FDI, the government has put in place an investor-friendly policy, wherein most sectors except certain strategically important sectors are open for 100% FDI under the automatic route, the minister said.
The policy on FDI is reviewed on an ongoing basis, to ensure that India remains attractive and investor friendly destination, he said, adding that changes are made in the policy after having consultations with stakeholders including apex industry chambers, associations, representatives of industry groups and other organisations.
The government has recently undertaken a number of reforms across sectors. In the recent past, reforms in the FDI policy have been undertaken in sectors such as Insurance, Petroleum & Natural Gas, Telecom etc.
FDI inflows serve to augment domestic investments, promote industrial development and employment generation across sectors and ancillary industries.
Such investments bring international best practices and latest technologies which facilitate skill development, export promotion and improvement of overall competitiveness of the economy leading to overall economic growth and development of the country.
The major sectors which received highest FDI equity inflow during April, 2000 to December, 2021 are Services Sector, Computer Software & Hardware, Telecommunications, Trading and Automobile Industry.
In order to curb opportunistic takeovers and acquisitions of Indian companies due to the Covid-19 pandemic, the Centre had amended the FDI policy in 2020 whereby an entity of a country, sharing land border with India or where the beneficial owner of an investment into India is situated in or is a citizen of any such country, can invest only under the government route.
China ranks 20th with only 0.43% share ($2.45 billion) in total FDI equity inflow reported in India during the period of April, 2000 to December, 2021, the minister said.