India received highest ever FDI inflow of INR 6,31,050 cr

Guwahati: The government has put in place a liberal and transparent policy for attracting foreign direct investment (FDI), wherein most sectors, except certain strategically important sectors, are open for 100% FDI under the automatic route.

Foreign investment is automatically routed in the "manufacturing" sector, according to the rules of the FDI Policy.

The investee business may choose to self-manufacture its goods or engage in contract manufacturing in India under an enforceable agreement, whether on a principal-to-principal or principal-to-agent basis. A manufacturer is also allowed to sell goods made in India through wholesale and/or retail, including through e-commerce, without seeking permission from the government. The government's actions to overhaul the FDI policy have led to a rise in FDI inflows in the nation. Inflows of foreign direct investment into India reached a record-high of INR 6,31,050 crores in the fiscal year 2021–22. Additionally, FDI equity inflow in the manufacturing sectors surged by 76 percent to INR 1,58,332 crore in the financial year 2021–22 from INR 89,766 crore in the previous year.

India's fiscal and monetary policies are designed to control the current account deficit and cut inflation (CAD). To address new economic concerns, monetary and fiscal changes are made under this overall framework.

The Reserve Bank of India has also taken a number of actions to increase foreign exchange inflows. These actions consist of:

• Incremental Foreign Currency Non-Resident (Bank) [FCNR(B)] and Non-Resident (External) Rupee (NRE) deposits from Cash Reserve Ratio (CRR) and Statutory Liquidity Ratio (SLR),
• permission to banks to raise fresh FCNR(B) and NRE deposits without reference to the extant regulations on interest rates until end-October 2022,

• All new issuances of G-Secs of 7-year and 14-year tenors under the Fully Accessible Route (FAR) for FPls,
• investments by FPls in G-Secs and corporate debt made till October 31, 2022, from the short term limit,
• allowing FPI in commercial paper and non-convertible debentures with an original maturity of up to one year,
• There is a temporary increase in the limit for external commercial borrowings (ECBs) under the automatic route from US$ 750 million or its equivalent per financial year to US$ 1.5 billion,
• There is an increase in the all-in cost ceiling under the ECB framework by 100 basis points, subject to the borrower's being of investment grade rating, and
• permission to AD Cat-I banks to utilize overseas foreign currency borrowings for lending in foreign currency to entities for a wider set of end-use purposes, besides exports.

This information was given by the Minister of State in the Ministry of Commerce and Industry, Shri Som Parkash, in a written reply in the Rajya Sabha.