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India’s FDI Sees Sharp Decline Amidst Global Economic Slowdown

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India's FDI Sees Sharp Decline Amidst Global Economic Slowdown


India’s economic landscape experienced a concerning dip in growth from April to July amidst a global economic slowdown. Foreign Direct Investment (FDI) saw a sharp decline, dropping from $17.28 billion to $5.7 billion compared to the same period last year. This significant downturn can be attributed to a moderation in gross FDI and an uptick in repatriation.

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Sectoral Breakdown

More than two-thirds of the fresh equity flows during this period were attributed to the manufacturing, financial services, business services, computer services, electricity, and other energy sectors. Despite the challenging global scenario, these industries played a pivotal role in sustaining the economic flow.

Major Contributors

Singapore, the Netherlands, Japan, the US, and Mauritius emerged as the major sources accounting for the FDI. These countries played a substantial role in shaping the investment landscape during this period.

Key Takeaways

The decline in FDI inflows can be attributed to the prevailing global slowdown, compounded by high inflation and interest rates. The Reserve Bank of India’s report highlights that the moderation in gross inward FDI, combined with an increase in repatriation of investments, contributed to this decline. While India is strategically positioned, global economic headwinds could potentially hinder FDI flows in the near future.

However, with the ongoing implementation of the robust Production-Linked Incentive (PLI) scheme and a concerted capex push within the country, India is well-positioned to counteract the challenges posed by the global economic landscape. These initiatives are expected to serve as stabilizing factors, ensuring India’s more resilient economic outlook in the coming months.

EV sales in 2023 zoom past 1 million milestone!

In a groundbreaking stride towards a more sustainable future, India has achieved a monumental milestone in 2023, with electric vehicle (EV) sales soaring past the one million mark. This remarkable achievement underscores India’s dedication to combating environmental challenges and signals a paradigm shift in the nation’s automotive landscape. EVs are now emerging as the preferred choice for eco-conscious consumers.

1. Rapid Growth: A Comparative View

According to data from the Ministry of Road Transport and Highways’ Vahan Dashboard, the sales of EVs in India surpassed one million in less than nine months of this year. This starkly contrasts with the previous year, when it took a full year to reach the same milestone.

2. Impressive Penetration

The EV penetration rate has also seen a significant boost, reaching an impressive 6.4% compared to the 4.8% achieved in the previous year. This surge reflects a growing acceptance and adoption of electric vehicles among Indian consumers.

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Source: Vahan Dashboard, Ministry of Road Transport and Highways

3. Segment Breakdown

When dissecting the one million sales figure, it’s noteworthy that 2-wheelers led the charge with over 5.8 lakh units sold, contributing to a substantial 5.2% of the total sales. Following closely, electric 3-wheelers accounted for 3.8 lakh sales, further cementing the popularity of EVs in the country.

Key Takeaways

The surge in EV sales to over one million units within the first nine months of the year is a significant milestone for the automotive industry in India. This surge can be attributed to increased individual purchases and strategic acquisitions by B2B EV fleet operators.

Key Drivers of EV Adoption

Several factors have played pivotal roles in driving the adoption of EVs in India:

1. Incentives and Subsidies

Incentives such as tax exemptions and subsidies provided under government initiatives like the FAME program have significantly reduced the costs associated with EV ownership. This has undoubtedly been a catalyst for the surge in sales.

2. Low Electricity Tariffs

Affordable electricity tariffs have made owning and operating an EV more cost-effective than traditional internal combustion engine vehicles.

3. Robust Charging Infrastructure

Establishing a robust charging infrastructure across the country has alleviated concerns about range anxiety, making EV ownership more practical and convenient.

4. Favorable Government Policies

The government’s introduction of friendly EV policies has created a conducive environment for both manufacturers and consumers, further bolstering the growth of the EV market.

India’s achievement of surpassing one million electric vehicle sales in a span of nine months marks a pivotal moment in the country’s journey towards a sustainable future. With strategic incentives, robust infrastructure, and favorable policies, the stage is set for further exponential growth in the EV market.


  1. What role did government initiatives play in boosting EV sales?

    Government initiatives, particularly the FAME program, provided substantial subsidies and incentives, making EVs more affordable for consumers.

  2. How does India's EV market growth impact the global automotive industry?

    India's rapid EV market growth signifies a significant shift in consumer preferences, potentially influencing global automotive trends towards more sustainable options.

  3. What are the key factors driving EV adoption in India?

    Key drivers include incentives, low electricity tariffs, a well-established charging infrastructure, and favorable government policies.

  4. What factors contributed to the decline in India's FDI from April to July?

    The decline in FDI during this period can be attributed to a combination of factors. A global economic slowdown and high inflation and interest rates played a significant role. Additionally, a moderation in gross inward FDI and an increase in repatriation of investments further contributed to the decline.

  5. Which sectors played a prominent role in sustaining economic activity during this period?

    Manufacturing, financial services, business services, computer services, electricity, and other energy sectors were the frontrunners, accounting for over two-thirds of the fresh equity flows. These industries played a crucial role in maintaining economic momentum despite the challenging global environment.

  6. How is India positioned to counteract global economic headwinds affecting FDI flows?

    India is strategically positioned to mitigate the impact of global economic challenges. Key initiatives are implementing the robust Production-Linked Incentive (PLI) scheme and a focused capex push within the country. These measures are expected to serve as stabilizing factors, ensuring a more resilient economic outlook for India in the face of global uncertainties.

Read more:  How Long-term investing helps create life-changing wealth – TOI.

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