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Foreign investment inflows into India

As a percentage of GDP, India’s inflows added up to around 3%, while China and Brazil got 3.2 and 2.2 per cent individually. On the other hand, Russia and South Africa had capital outflows. Data from IMF’s Balance of Payments statistics for the calendar year (CY) 2020 uncovers that India got about $80 billion in foreign direct investment (FDI) and foreign portfolio investment (FPI) inflows, positioning behind China yet higher than Russia, Brazil and South Africa put together. Apparently, India’s demographics, its huge market, a functioning democracy, and a favourable economic outlook over the longer term are likely key factors that have driven foreign investors to invest in India during this period.

The Reserve Bank of India seems to have been mediating in foreign exchange markets to stem a real effective exchange rate  (REER) appreciation and consistently develop its foreign reserves by $149 billion.

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