Page 18 - CII-ARTHA

ARTHA

Salient features of FDI into India Competition from other emerging economies has also
intensified. ASEAN economies, such as Vietnam and
Accumulating over US$1 trillion in FDI over the last two Indonesia, continue to attract substantial inflows, while
decades stands as a significant achievement for India. Mexico has seen a surge in FDI driven by nearshoring,
However, a closer assessment suggests that with inflows reaching US$21.4 billion in Q1 2025, a
7
considerable untapped potential remains. 5.4 per cent increase over 2024 . More importantly, the
scale and consistency of inflows into ASEAN economies
offer a key lesson. These economies have historically
First, a comparative assessment with peer economies attracted sustained FDI, reaching a record US$225 billion
highlights both strengths and gaps. India continues to lag in 2024, a 10 per cent increase from the
behind China in terms of global FDI share, despite China’s previous year , which has played a critical role in
8
own declining trend. China’s share in global FDI inflows strengthening export performance and integration into
fell from a peak of 17 per cent in 2020 to 8 per cent in global value chains.
2024. In comparison, India’s share, which peaked at
around 7 per cent in 2020, declined more sharply to just 2 Second, the composition and dynamics of FDI flows point
to emerging concerns, particularly the decline in net FDI.
per cent in 2024 (Figure 3), reflecting, in part, a more
cautious global investment climate. A key issue is the sharp rise in foreign capital repatriation
and disinvestment, which has contributed to the decline in
At the same time, India has delivered a relatively strong net FDI flows (Figure 4). This has occurred primarily
performance on certain metrics. India’s net FDI inflows as through sales of shares and withdrawals via Initial
a percentage of GDP stood at 0.7 per cent in 2024, Public Offerings (IPOs) . Data indicates that repatriation
9
compared to 0.1 per cent for China, signalling relatively increased significantly between 2022-23 and 2023-24,
stronger investment appeal when accounted for size of closely correlating with the rise in IPO activity from
10
economies. FY23 onwards .

Figure 3: Share in Global FDI (%)
18%
China
16%
Mexico
14%
India
12%
Indonesia
10%
Vietnam
8%

6%

4%

2%
0%
1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 2022 2024

Source: UNCTAD’s World Investment Report 2025

7 UNCTAD. (2025a). World Investment Report 2025: International investment in the digital economy. Geneva, Switzerland: UNCTAD.; UNCTAD. (2024). Southeast
Asia: Foreign investments resilient despite global economic uncertainties. Press Release UNCTAD/PRESS/PR/2024/022. Geneva, Switzerland: UNCTAD.
Mahoney, N. (2025). Borderlands Mexico: Nearshoring investments still flowing south of the border
8 UNCTAD (2025a)
9 EPW. (2025). Foreign Direct Investments Have Lost Traction. Economic & Political Weekly, 60(23).
10 KPMG. (2025). IPOs in India – FY 2025. Retrieved from https://assets.kpmg.com/content/dam/kpmgsites/in/pdf/2025/05/ipos-in-india-fy-2025.pdf.
KPMG. (2024). IPOs in India. Retrieved from https://assets.kpmg.com/content/dam/kpmgsites/in/pdf/2024/07/ipos-in-india-fy24.pdf.coredownload.inline.pdf

18