Trends of strong FDI to accelerate in coming quarters: Experts

Experts predict India's FDI to surge with a potential Fed rate cut and diverse investment destinations in emerging sectors.

“With Foreign Direct Investments (FDI) growing 47.8% to $16.17 billion during April-June 2024, India is expected to see further acceleration in the inflow on account of a potential Fed rate cut, modest growth outlook in the U.S., and the country’s favourable economic outlook,” experts say.

They also said that investment destinations have changed over the decade and have got more diversified, with capital flowing into new emerging sectors.

“Compared to eight years ago, power, construction, healthcare, chemicals, and non-conventional energy have now been attractive investment destinations,” Rumki Majumdar, Economist, Deloitte India, said.

India receives highest FDI from Singapore in 2023-24; Mauritius second biggest investor: Government data

"We foresee this trend of strong FDI to accelerate in the coming quarters. The anticipated U.S. election results, a potential Fed rate cut, modest growth outlook in the U.S., and India's favourable economic outlook will likely attract global investors to India," she added.

Aakash Dasgupta, partner, IndusLaw, said that while the FDI inflow seems to have jumped exponentially in the first quarter of 2023-24 in comparison to the same period in the previous financial year, it must also be remembered that FDI in Q1 of FY23 was particularly low. FDI inflows were at $10.94 billion in April-June 2023-24.

He said that the current FDI inflows are closer to the numbers in the years preceding the last year. Hence, while the jump is significant in relative terms, it must be viewed as correcting back to previous levels.