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Not only is FDI in India falling, but foreign companies are increasingly withdrawing their money

New Delhi: Foreign investors are not only injecting less money into India than they used to, they are also increasingly taking their money out of the country.

Actual foreign direct investment (FDI) in India fell to $26.6 billion in FY 2023-24, down 37 percent from the previous fiscal, according to data released by the Reserve Bank of India (RBI) on Tuesday evening. The figure is at its lowest since 2006-07.

An analysis by ThePrint found that the main reason behind the decline in the value of actual FDI in India is the increase in the amount foreign companies pulled out of the country, which grew to $44.4 billion during 2023- 24, an increase of 51 percent from the previous year.

This is the highest amount taken out by foreign companies in a single year since at least 2011-12, when the RBI started releasing this data.

Infographic: Prajna Ghosh |  Printed
Infographic: Prajna Ghosh | Printed

Actual FDI in India is the difference between how much money foreign companies invest in the country (gross investment) and how much they withdraw, called repatriation or disinvestment.

What is happening in India is that the inflow of foreign investment into the country is decreasing while the outflow is increasing.

Also read: Why FDI in India is at 16-year low – no real ease of doing business, ill-advised treaty moves

Less comes in, more goes out

Gross foreign direct investment in India stood at $71 billion in the last financial year, marginally lower than $71.4 billion in 2022-23.

However, foreign companies repatriated or disinvested $44.4 billion in 2023-24, which meant that actual direct investment in the country was only $26.6 billion.

The amount invested has been declining for two consecutive years now, but the amount withdrawn has been increasing for longer than that.

The amount repatriated or disinvested by foreign companies in India stood at $18.4 billion in the pre-pandemic year, FY 2019-20. Since then, it has been steadily increasing – $27 billion in the pandemic year 2020-21, $28.6 billion in 2021-22 and $29.3 billion in 2022-23.

During the last financial year, however, the amount withdrawn has increased to 44.4 billion dollars.

(Edited by Mannat Chugh)

Also read: The Modi government is causing a slowdown in India’s FDI inflows. But he lacks a bigger problem

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