FDI in India: An Overview of Trends and Policies

Backed by progressive economic reforms, India's performance in terms of attracting FDI has been very strong. However, FDI flow to India is extremely skewed in nature, starting from the source right upto the destination, not only in terms of the States receiving FDI flows but also the sectors. On one hand, where only two countries account for more than half of the cumulative equity investments, on the other, only two States cumulatively account for more than half of the FDI equity inflows. At the same time, FDI equity inflow is skewed across major sectors of the economy with the services sector accounting for close to half of the inflow in recent years. This paper tracks FDI inflow in India historically from 2000–01 and highlights the recent policy initiatives of the Government of India.