Non-financial companies accounted for nearly 90 per cent of the FDI equity at face value
FinTech BizNews Service
Mumbai, 11 October, 2024: Today, the Reserve Bank released the provisional results of the 2023-241 round of the annual census on foreign liabilities and assets (FLA) covering cross-border liabilities and assets of the entities {viz., companies, limited liability partnerships (LLPs), alternative investment funds (AIFs) and partnership firms} with inward/outward direct investment (DI).
Out of the 41,653 entities which responded in the latest census, 37,407 reported foreign direct investment (FDI) and/or overseas direct investment (ODI) in their balance sheet for March 2024. Of these entities, 29,926 had also reported in the previous census round and 7,481 have newly reported in the current round. Over three-fourths of the companies that reported inward direct investment were subsidiaries of foreign companies (i.e., single foreign investor holding more than 50 per cent of total equity).
The census captures detailed information on (a) market value of liabilities and assets of Indian DI entities arising on account of cross-border direct and other investments; and (b) trade parameters (viz., activity sector, sales, purchase, exports, and imports), in addition to identification particulars of a reporting entity. The variations in outstanding assets / liabilities between the beginning and end of a financial year would be different from flows recorded in India’s balance of payments (BoP) statistics during the year, as the former would also include valuation changes due to price and exchange rate movements.
Main Findings:
Over 97 per cent of the responding DI entities were unlisted as at end-March 2024 and they held the dominant share in total FDI equity capital at face value (Tables 1 and 2A).
Non-financial companies accounted for nearly 90 per cent of the FDI equity at face value (Table 2B).
Listed and unlisted2 companies had nearly equal shares in total FDI at market value (Table 3A).
Supported by valuation gains as well as fresh inflows, total FDI in India surged by 23.3 per cent at market value in rupee terms during 2023-24; on the other hand, ODI growth was much lower at 3.4 per cent (Table 3B).
Unlisted entities recorded 17.5 per cent growth in FDI at market value during the year; in the listed space, the corresponding growth was even higher at 29.8 per cent (Tables 3A and 3B).
With FDI growth outpacing ODI rise, the ratio of outward to inward DI stock at market value declined to 16.1 per cent in March 2024 from 19.3 per cent a year ago (Table 3B).
DI entities' other non-portfolio liabilities (viz., trade credit, loans, currency and deposits, and other payable) to unrelated (third party) non-resident entities were less than half of their FDI liabilities at market value, but their similar assets exceeded their ODI at market value in March 2024 (Table 4).
The United States continued to be the largest source of FDI in India, followed by Mauritius, Singapore and the United Kingdom. In case of ODI, Singapore, the United States and the United Kingdom were the top destinations (Tables 5 and 6).
Manufacturing sector accounted for more than half of total FDI equity capital at market value; at face value, it had nearly 40 per cent share (Tables 7 and 8).
In the services sector, ‘information and communication’ and ‘financial and insurance activities’ were the major FDI recipients (Table 8).
During 2023-24, total sales and purchases of foreign subsidiaries in India increased by 13.2 per cent and 10.6 per cent, respectively, in rupee terms (Tables 9A and 9B).
Foreign subsidiaries in India maintained strong external trade linkages as exports and imports accounted for 35.4 per cent and 31.5 per cent of their sales and purchases, respectively (Tables 9A to 9D).
Both sales and purchases of overseas subsidiaries of Indian companies recorded 11 per cent growth during 2023-24 in rupee terms; their outward focus was reflected in export-to-sales and import-to-purchase ratios of 62.4 per cent and 75.3 per cent, respectively (Tables 10A to 10D).
The difference between purchase-to-sales ratio of overseas subsidiaries of Indian companies (85.2 per cent) from that of foreign subsidiaries in India (72.5 per cent) reflects divergence in their patterns of value addition, nature of markets and other business considerations.
