Unlisted companies attract 97% of FDI in FY20

Kolkata: Closely held Indian firms attracted about 97% of foreign direct investment in FY20 and had enjoyed higher overseas equity participation as compared to listed entities, Reserve Bank of India said in its annual census on foreign liabilities and assets. FDI equity of unlisted companies witnessed a 15.9% rise during the same period.

This marks the proliferation of start-ups and new gen fintech firms and their success in bringing in overseas investment in their venture.

India attracted a total of Rs 7.06 lakh crore foreign direct investment in FY20. As many as 24,580 firms have raised equity from foreign investors. These entities include companies, limited liability partnership and partnership firms.

The provisional result of the census released by the central bank late Thursday also showed that non-financial Indian firms are way ahead in attracting foreign direct investments (FDI) when compared to financial services companies, grabbing nearly 90% of the inward foreign direct investment pie.

Total FDI in India grew by 1.2% at market value (in rupee terms) during 2019-20; the year-end market valuation of equity, especially that of the listed companies, was strongly influenced by the stock market crash in March 2020 at the onset of Covid-19 pandemic, RBI said.

Manufacturing sector share in total FDI equity capital stood at 45.5% at face value and 52.3% at market value. Food products and automobiles (motor vehicles, trailers and semi-trailers) had significant share in FDI in manufacturing sector while ‘information and communication services’ and ‘financial and insurance activities’ were the top FDI recipients in the services sector.

Out of the 30,753 reported entities in the latest census round, 27,801 had foreign direct investment and/or overseas direct investment in their balance sheet, according to the data. Nearly three-fourth of the reported inward direct investment companies were subsidiaries of foreign companies.

Total ODI recorded 13.4% higher growth during 2019-20. The ratio of inward to outward direct investment at market value stood at 4.7% in March 2020.

The census captures detailed information on market value of liabilities and assets of Indian firms arising on account of cross-border direct investment and other investments.