The National Capital Region has pipped long-standing leader Maharashtra in attracting FDI (foreign direct investment) equity inflows into the country.
A report by Department of Industrial Policy and Promotion mentions that the ‘New Delhi region’, covering the national capital and parts of UP and Haryana (which is broadly contiguous with NCR), received FDI equity inflows of Rs.57,333 crore ($8.3 billion) in the first nine months of 2018-19. FDI equity inflows aggregated about $33.5 billion in the first nine months of fiscal year 2018-19, a 7% decline compared with the same period in the previous fiscal year.
Maharashtra, which had the highest share of FDI in the first nine months of fiscal 2016-17 (49%), has witnessed a consistent drop in its share. Its share in total FDI flows fell to 32% during the corresponding period in fiscal 2017-18 and further to 24% in the same period in FY2018-19.
In contrast, NCR has seen a sustained increase in its share in total FDI equity inflows — from 14% in the first nine months of FY2016-17 to 17% in FY2017-18 and further to 25% in the same period in FY2018-19.
Maharashtra’s FDI inflows fell 30% year-on-year (y-o-y) to Rs.56,346 crore ($8 billion) in the first nine months of FY19 while that of Tamil Nadu contracted 26% y-o-y to Rs.14,166 crore ($2.1 billion). Maharashtra, Delhi, Tamil Nadu, Karnataka and Gujarat received nearly 75% of the total FDI equity inflows into the country in the first nine months of FY2018-19.
Tamil Nadu’s share in FDI inflows declined to 14% in the first nine months of FY2018-19 from 18% during the corresponding period in FY2017-18, but it was much higher than the 3% share in the same period in FY2016-17, data showed. FDI inflows into Karnataka also slumped 26% y-o-y to Rs.33,014 crore ($4.74 billion). Gujarat, however, saw higher inflows — from $787 million in the first nine months of FY2017-18 to about $1.7 billion in the same period in FY2018-19.
States that have been laggards in the past in attracting FDI, are also catching up fast. Andhra Pradesh, West Bengal, Kerala, Rajasthan, Punjab, Haryana and Himachal Pradesh collectively received nearly 15% of FDI equity inflows in the first nine months of FY2018-19.
They had only a 4% collective share in the comparable period the previous year. “Investments in emerging economies were lower partly due to uncertainty in the global markets,” said Rucha Ranadive, economist, CARE Ratings. “Foreign investments in emerging markets have mainly been adversely impacted by global headwinds such as the slowdown in the global economy, trade war between the US and China, concerns over Brexit, tightening of monetary policies by major global central banks, rupee depreciation and geo-political tensions among others.”
The top-5 sectors — services, computer hardware and software, chemicals, telecommunication and trading— accounted for nearly 65% of total FDI equity inflows.