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FDI has been gradually increasing in India since 1991. In an effort to fulfil India’s aspirational objectives, the economic reform process has undergone continuous change. Under this process FDI policy has been constantly liberalized to ensure that India remains an attractive and investors friendly destination. After pursuing a restrictive policy towards FDI over the past four decades, India changed tracks in 1990s and embarked on a broader process of reforms designed to increase its integration with the global economy. The New Industrial Policy was launched on 24 July 1991. The new industrial policy and subsequent changes liberalized the nation’s industrial policy in general and FDI policy in particular. This included the abolition of the industrial approval system for all industries other than those that were strategic or environmentally sensitive, automatic clearance of 51% FDI in 35 high priority industries. New sectors such as mining, banking, insurance, telecommunication, highways, construction and management were opened to the private sectors including foreign owned companies. Since 2014, a liberal policy has been in place to encourage higher levels of FDI, under which FDI up to 100% is permitted under the automatic route in the majority of sectors/activities. FDI policy reform has been implemented in coal mining, contract manufacturing, and civil aviation, and clarity has been provided for digital media, intermediaries or insurance intermediaries. The government recognizes FDI as one of the key forces behind economic expansion and a significant source of funding for India’s economic development. In order to make India a more attractive investment destination, attract more investment and increase employment and growth in a variety of sectors, the government has pushed through FDI reform since 2014 in a number of sectors. India put a lot of effort into expanding FDI inflows over the last decade and launched a comprehensive FDI liberalization policy. The ‘Make in India’ project was introduced by the Indian government in September 2014 with the goal of promoting innovation, facilitating investment, and creating world-class manufacturing infrastructure. These changes improved India’s business environment for FDI and aided in boosting growth in FDI inflows. The Indian government raised the FDI cap in some sectors, such as telecom, to 100%, in insurance, to 49%, and in defence equipment, beyond 26% on a case by – case basis. To ensure that India continues to be an attractive investment destination, the FDI policy is regularly reviewed and modified. Direct investment regulations were further modified in 2016, For the purpose of promoting foreign investment in start-ups and easing the investment process for foreign venture capital investors. The Foreign Investment Promotion Board (FIPB) was abolished in May 2017 to simplify the approval process of foreign investment and promote ease of doing business. The processing of applications for FDI has been delegated to the concerned Ministries/Departments, with the Department for Promotion of Industry and Internal Trade (DPIIT) serving as the nodal department. With a view to facilitate FDI, a new portal called the Foreign Investment Facilitation Portal (FIFP) was launched to provide a single- point interface for investors. In 2019, the government liberalized FDI rules for various other sectors. Accordingly, Single Brand Retail Trading (SBRT), 100% FDI via the automated route was approved, and the government significantly lowered the requirements for SBRT’s local sourcing. In 2020, the government increased the FDI limit to 74% in defence sector through automatic route from 49% and approved 100% by government route. In 2021, GOI increased FDI limit from 49% to 74% in insurance companies under the automatic route and allow foreign ownership and control with safeguards. GOI allows foreign investment up to 100% under automatic route in telecom services sector. In the context of the above facts, the present study makes an attempt to analyze trends and patterns of FDI inflow in India during 2000-01 to 2021-22.

R. Nagraj (2003) looked at the patterns and problems with FDI inflows during the 1990s and raised some concerns about how well FDI contributes to the growth of an economy. Based on the analytical discussion and comparative experience, the study recommended a more practical policy. The study came to the additional conclusion that India wants to compete with the prosperous Asian economies for a larger portion of global FDI inflows. Nagesh Kumar (2005) investigated how the volume and pattern of FDI inflows to India have changed as a result of economic changes in general and the liberalisation of FDI policy in particular. The study also examined how the Indian government has changed its policies regarding FDI. Jaya Gupta (2007) reviewed the changing sectoral trends in India due to FDI inflows since liberalization. The study also examined the impact of reform implications on sectoral growth and economic development of India as a whole. Sapna Hooda (2011) examined how FDI has affected the expansion of the Indian economy. The study came to the conclusion that FDI is a crucial and significant element affecting the rate of growth in the Indian economy. Gulshan Akhtar (2013) studied the pre- and post-reform eras and demonstrated how liberalisation of policy affected FDI inflows in India. According to the study's findings, foreign direct investment has been crucial to the expansion and advancement of developing economies, notably India. D.K. Adhana and N. Gulati (2019) studied the trends of FDI inflow in India for the period 2000-01 to 2017-18. The study also emphasised FDI inflows in various sectors and country-wise approvals of FDI inflow during the period from April 2000 to March 2018. Prahalad Dhaker (2020) analysed the recent trends of foreign direct investment inflow into India from 2000-01 to 2017-18 and also studied the sectoral FDI equity inflows in India.  According to the study’s finding, FDI inflows have increased after the new economic reforms, and now India seems to be quite an attractive place for foreign investor. India has taken number of steps to simplify the FDI regime to make it easily comprehensible to foreign investors. Amit Girdharwal (2021) studied the trends and patterns of FDI inflow in India. The study also investigated how the trends and patterns of FDI inflows in India have changed as a result of reforms of FDI policy in India. The study also examined how the Indian government has changed its policies regarding FDI.

This study is basically Descriptive in nature. The study is based on secondary data published by various publications of government of India and other organizations such as, RBI Annual Report, various bulletins of Reserve Bank of India, World Investment Report, Economic Survey, Factsheet of Department for Promotion of Industry and Internal Trade (DPIIT), India Brand Equity Foundation (IBEF) etc. The relevant data has been collected for the period 2000-01 to 2021-22. Various statistical methods, such as growth rate, percentage, graph, and diagram, have been used to reach a valid conclusion.

Analysis of the study was carried out in following three sub sections:

A. Trends of FDI inflow in India

B. Country Sources of FDI inflow

C. Sectoral Distribution of FDI inflow

A. Trends of FDI Inflow in India:

Except few years, the FDI inflow shows increasing trend during the entire period (2000-2022) of the study. Table no.1 and figure no.1 show the trends of FDI inflow in India during the period 2000-01 to 2021-22.

Table no-1: Total FDI Inflow in India (From April 2000 to March 2022)

Financial Year (April- March)	Total FDI Inflow in India (in USD Million)	%age growth over previous year  (in USD terms)
2000-01	4,029	-
2001-02	6,130	(+) 52 %
2002-03	5,035	(-) 18 %
2003-04	4,322	(-) 14 %
2004-05	6,051	(+) 40 %
2005-06	8,961	(+) 48 %
2006-07	22,826	(+) 155 %
2007-08	34,843	(+) 53 %
2008-09	41,873	(+) 20 %
2009-10	37,745	(-) 10 %
2010-11	34,847	(-) 08 %
2011-12	46,556	(+) 34 %
2012-13	34,298	(-) 26 %
2013-14	36,046	(+) 5 %
2014-15	45,148	(+) 25 %
2015-16	55,559	(+) 23 %
2016-17	60,220	(+) 8 %
2017-18	60,974	(+) 1 %
2018-19	62,001	(+) 2%
2019-20	74,391	(+) 20 %
2020-21 (P)	81,973	(+) 10 %
2021-22 (P)	83,572	(+) 2 %
CUMULATIVE TOTAL (From April, 2000 to March, 2022)

Source- Reserve Bank of India (RBI) and Department for Promotion of Industry and Internal Trade (DPIIT) 

Table no.1 and figure 1 show that from 2000 to 2002, FDI increased from USD 4,029 million. But in the next two consecutive years (2002 to 2004), FDI decreased to USD 4,322 million. FDI had surged since 2004, with the largest growth of 155% being recorded in 2006-07. In fact, the country received the highest FDI Inflow (USD 41,873 million) in financial year 2008 to 2009. The US financial crisis had a significant negative impact on the stock market globally, during the third quarter of financial year 2008. This unexpected crisis created a turbulent situation. Furthermore, FDI decreased from two consecutive years from the period 2009 to 2011. In F.Y. 2011-2012, India anticipated overcoming the negative effects of the financial crisis and succeeding in attracting substantial inflows once more, but in F.Y. 2012-13, the FDI inflow framework again moved downward. In year 2014-15, FDI inflow increased significantly. The reason for this increase in FDI was the encouragement given by the government to this regulation and the believe of a better business environment. In F.Y. 2014-15, FDI inflow in India stood at 45,148 USD million, which increased to USD 60,220 million in 2016-17 and further to the highest ever annual FDI inflow of USD 83,572 million reported during the F.Y. 2021-22. The total amount of FDI that has entered India over the last 22 years (From April 2000 to March 2022) is USD 8,47,400 million, while the amount received over the last 8 years (From April 2014 to March 2022) is USD 5,23,838 million, nearly 61% of the total amount received over the last 22 years.

B.    Country sources of FDI inflow:

Table no.2 and figure no. 2 show the cumulative amount of FDI inflow and share of the top ten countries from where India received FDI inflow.

Table no-2: Major FDI investing Countries in India

(From April 2000 to March 2022)

Rank	Country	Cumulative inflow (in USD Million)	% age to total inflow (in terms of USD)
1	MAURITIUS	1,57,742	27%
2	SINGAPORE	1,30,967	22%
3	U. S.A.	54,151	9%
4	NETHERLANDS	41,261	7%
5	JAPAN	36,942	6%
6	U.K.	31,902	5%
7	CAYMAN ISLANDS	14,153	2%
8	GERMANY	13,591	2%
9	UAE	12,225	2%
10	CYPRUS	11,367	2%
Total FDI Equity Inflow from all countries *		5,88,528	-

Source: DPIIT, Ministry of commerce and Industry, Government of India.

*   Includes inflow under NRI Schemes of RBI.

Note: (i)Cumulative country-wise FDI equity inflow only.

(ii)%age worked out in USD terms & FDI inflow received through FIPB/SIA+RBI’s Automatic Route + acquisition of existing shares only.

The above table and figure show that ten countries i.e., Mauritius, Singapore, USA, Netherlands, Japan, UK, Cayman Island, Germany, UAE, and Cyprus have been major investor countries, as around 69% of total FDI inflow during the period 2000-2022 has came from these countries. Further data reveals that Mauritius (primarily routed through developed nations) is the largest source of FDI inflows in India with the share of 27%. This dominance happens because Mauritius is a country with very minimal, almost zero tax regime, and it has signed Double Taxation Avoidance Agreement (DTAA) with India. Singapore remained on second dominant sources of FDI inflows with the share of 22%. The other major countries are USA, with a relative share of 9%, followed by Netherlands, Japan and U.K. with share of 7%, 6% and 5% respectively. Cayman Island, Germany, UAE, and Cyprus show equal share of FDI inflow, i.e., 2%. During the period of 2000-01 to 2021-22 cumulative inflows of FDI is USD 5,88,528 million.

C.    Sectoral Distribution of FDI inflow:

The major sectors that attracted most FDI during the period 2001-2022 in India are shown below.

Table no-3: Sectors Attracting Highest FDI Equity Inflow (From April 2000 to March 2022)

Ranks	Sector	Cumulative inflow (in USD Million)	% age to total inflow (in terms of USD)
1	SERVICES **	94,195	16%
2	COMPUTER SOFTWARE & HARDWARE	85,517	14%
3	TELECOMMUNICATIONS	38,331	7%
4	TRADING	34,741	6%
5	AUTOMOBILE INDUSTRY	32,842	6%
6	Construction (INFRASTRUCTURE) ACTIVITIES	27,969	5%
7	CONSTRUCTION DEVELOPMENT: Townships, housing, built-up infrastructure and construction-development projects	26,209	5%
8	CHEMICALS (OTHER THAN FERTILIZEINR)	19,452	3%
9	DRUGS & PHARMACEUTICALS	19,405	3%
10	METALLURGICAL INDUSTRIES	17,015	3%

Source: DPIIT, Ministry of Commerce and Industry, Government of India

Note:(i)** Services sector includes Financial, Banking, Insurance, Non-Financial / Business, Outsourcing, R&D, Courier, Tech. Testing and Analysis, Other

(ii) Cumulative Sector- wise FDI equity inflows only.

Table no.3 and figure 3 reflect that service sector attracted the highest FDI inflows (USD 94,195 million) during 2000-01 to 2021-22 and total growth percentage has been recorded 16% in terms of USD. After services sector, computer software and hardware recorded 14% growth percentage of total inflows with 85, 517 million, followed by telecommunications sector, trading, and automobile industry, with 7%, 6%, and 6% growth respectively. Construction (infrastructure) activities and construction development projects both sectors show equal share of 5%, chemicals (other than fertilizers), drugs & pharmaceuticals, metallurgical industries, all three sectors show equal share of FDI i.e., 3%.

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