India is a large country with a population of 1.4 billion, and it is also a country full of contradictions and challenges.
The Indian economy has made certain achievements in the past few decades, but it also faces many problems, such as insufficient infrastructure, backward education, and wealth gap.
These issues not only affect India's internal development, but also hinder India's connection with the external world, especially cooperation with foreign investors.
Foreign direct investment (FDI) refers to the establishment or expansion of a business by a foreign enterprise or individual in another country, and the ownership or control of a certain proportion of the equity or management rights of the business.
FDI can bring financial, technological, managerial, and market advantages to recipient countries, promoting their economic growth and development.
However, FDI also needs to consider factors such as investment environment, risks, and returns, so not every country can attract enough FDI.
The global FDI inflow in 2022 was $1.5 trillion, a 35% decrease from 2019 and the lowest level since 2005.
This is mainly because the COVID-19 epidemic has had a serious impact on the global economy and trade, leading multinational companies to cut their foreign investment plans.
The report predicts that global FDI inflows will slightly rebound in 2023, reaching $1.7 trillion, but still below the level of 2019.
Against the backdrop of declining global FDI inflows, how has India performed? Why is India unable to maintain a high level of FDI inflows in the 2022-23 fiscal year?
1、 How is India performing
According to relevant data, India's FDI inflows in the 2022-23 fiscal year were $46 billion, a 22% decrease compared to the previous fiscal year.
This is in stark contrast to the historic high of $59 billion in the 2021-2022 fiscal year.
In the previous fiscal year, India benefited from significant investments in areas such as e-commerce, digital technology, and education, especially from technology giants such as Facebook and Google investing in Reliance Jie, India's largest mobile operator.
However, in the 2022-23 fiscal year, investment in these areas significantly decreased, while India's exports to foreign oil companies also significantly decreased due to rising oil prices and declining demand.
So, why is India unable to maintain a high level of FDI inflows in the 2022-23 fiscal year?
2、 Reasons for India's inability to maintain a high level of FDI inflows
Firstly, India suffered a severe blow from the second wave of the epidemic in the fiscal year 2022-23.
According to data from the World Health Organization, between April and June 2022, India reported over 300000 new confirmed cases per day, with a peak of 400000 and over 400000 deaths.
This has led to strict blockade measures being implemented by relevant departments in India, limiting the flow of personnel and materials, and affecting economic activity and investment confidence.
Although India began to relax its blockade and accelerate the pace of vaccination in the second half of 2022, the losses caused by the epidemic to the Indian economy and society are enormous, and it has also raised concerns among foreign investors about India's future prospects.
Secondly, India faced a deterioration in the international trade environment in the 2022-23 fiscal year.
Due to the conflict between Russia and Ukraine, global energy and commodity prices have risen, which is a heavy burden for India, a country heavily dependent on imports.
In the fiscal year 2022-23, India's total import and export of goods was $1.1 trillion, a decrease of 10% compared to the previous fiscal year.
Among them, the import volume was $700 billion, a decrease of 8%.
The export value was $400 billion, a decrease of 13%.
India's trade deficit is $300 billion, an increase of 3%.
This means that India needs more foreign exchange to pay its import bills, and foreign investment is one of the important sources of foreign exchange.
However, with increasing global economic uncertainty, foreign investors may reduce their investment in India to avoid exchange rate and policy risks.
India experienced domestic social unrest in the 2022-23 fiscal year.
Between November and December 2022, there were several large-scale protests in India, mainly involving groups such as farmers, workers, and student groups.
These protest activities reflect deep divisions and dissatisfaction in Indian society, such as agricultural reform, labor laws, education policies, citizenship laws, etc.
These protests not only affected public order and transportation, but also exerted pressure on relevant departments in India to modify or withdraw some controversial laws and policies.
These protests have also exposed the lack of communication and trust between relevant departments in India and civil society, as well as the shortcomings and challenges of India's democratic system.
These issues not only weaken the authority and efficiency of relevant departments in India, but also affect foreign investors' assessment of India's stability and rule of law environment.
These factors not only constrain the development potential of India's economy, but also hinder India's connection with the outside world.
finish
In summary, in the previous text, we analyzed and interpreted why India's economy cannot thrive, and why no foreign investment is willing to take the blame.
It is not difficult to find that India's economic development has been restricted and hindered in many ways, including the COVID-19 epidemic, the international trade environment and domestic society.
These factors not only affect India's internal development, but also its connection with the external world.
If India wants to achieve economic takeoff and attract more foreign investors to become the "loser", it needs to take more proactive and effective measures to improve its investment environment and enhance its competitiveness and influence in the global market.
So, what is your opinion on India's attractiveness to foreign investment? Welcome to leave a message to share.