HSBC Holdings Plc's estimations show that net foreign investment decreased to $13 billion: Checkout this article

Notwithstanding investors' growing optimism about the fastest-growing major economy in the world, foreign direct investment into India decreased in the last year.

HSBC Holdings Plc's estimations show that net foreign investment decreased to $13 billion in September of this year from $38 billion in the same month the previous year. The amount peaked in March of 2021, during India's fiscal year 2021, at $44 billion.

Despite an upsurge of anticipated investments announced by international corporations and investment funds, there has been a retreat. These range from multibillion-dollar renewable energy projects that are attracting attention from Gulf countries to semiconductor plants led by US businesses.

The Reserve Bank of India's official balance of payments data shows a trend that is consistent with the FDI estimates. According to the most recent report, net foreign direct investment inflows decreased to $4.8 billion during the first half of the fiscal year (April to September of last year) from $19.6 billion during the same period the previous year.

According to HSBC, the decline in FDI was surprising considering the economy's quick expansion and growing proportion of international trade. The government anticipates that the GDP will expand by 7.3% in the fiscal year that ends in March, which is the same rate as the previous year.

HSBC explained the decline in foreign direct investment (FDI) last year, stating that it was due to a change in investor sentiment. The bank's economists stated in research released on Thursday that one contributing factor is the decline in funding for Indian digital start-ups, which is consistent with a global trend.

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Another issue is a drop in investment in so-called tangible sectors such as automobiles, pharmaceuticals, and construction. However, many investors have recently indicated their intent to invest in developing areas such as artificial intelligence, data centers, and electric vehicles, according to the bank, indicating that investor hunger is shifting to new horizons.