RBI Annual Report 2024-25 on India’s FDI Paradox
Why in the news
The RBI Annual Report 2024-25 shows an FDI puzzle: strong gross inflows but little left after exits.
About FDI
Overseas investment in productive sectors, bringing capital, technology, jobs and balance-of-payments support.
Key facts
| Indicator | Finding |
|---|---|
| Manufacturing FDI share | 12% |
| Average annual FDI growth, FY21-FY25 | 0.3% |
| RBI vs UNCTAD data | RBI up to 60% higher |
- Manufacturing and computer services see falling FDI; inflows from the US, Germany and UK dropped.
- Private equity and venture capital focus on exits, hinting at round-tripping.
Concerns
- Reliance on financial flows rather than greenfield projects.
- Policy uncertainty, tax complications, limited labour and land reforms, weak impact monitoring.
Way forward
- Stable rules, quality over quantity, easier business climate, tax treaty rationalisation and sector-wise monitoring.
Exam angle
- Report: RBI Annual Report 2024-25.