India’s outward foreign direct investment (FDI) fell by 12.14% in October to $1.88 billion, compared to $2.14 billion in September. This decline reflects a slowdown in global economic growth, which has impacted investment flows worldwide.
Outbound FDI, which comprises equity, loans, and guarantees, is typically used to finance investments in subsidiaries or stakes in foreign companies. However, a slowdown in developed markets has led to fewer investment opportunities, according to bankers.
Inward FDI into India has also been sluggish, with net FDI falling to $2.99 billion in April-August 2023-24, down from $18.03 billion in April-August 2022-23. This decline is due to a moderation in global investment activity and a rise in repatriation.
Despite the overall decline in outward FDI, equity commitments increased to $865.28 million in October 2023, up from $485.08 million in September 2023. However, equity commitments were still significantly lower than the $1.42 billion recorded in October 2022.
Debt commitments decreased to $245.81 million in October, down from $510.29 million in September. Guarantees for overseas units also declined to $774.19 million in October from $1.14 billion in September.
Overall, the decline in India’s outward FDI is a reflection of the broader slowdown in global economic growth. However, there were some bright spots, such as the increase in equity commitments.