Winning Bizness Economic Desk

The country’s share in the global Foreign Direct Investments (FDIs) has slid sharply to 2.1 per cent last year (2023) from a high of 6.5 per cent registered in 2020.

Additionally, the nature of overseas funds inflows in terms of sectors and states have remained skewed, well-known firm India Ratings and Research (Ind-Ra) said.

According to the World Investment Report 2024 by the UN Trade and Development (UNCTAD), India slid to 16th position in attracting FDIs in 2023 from 8th position in the previous year (2022).

The Foreign Direct Investment (FDI) inflow as a percentage of GDP has dwindled consistently in the past three years and it fell from 3.06 per cent in FY 2020-21 to 1.99 per cent in 2023-24.

During FY 2021-22, it stood at 2.68 per cent and in 2022-23 at 2.13 per cent.

As a proportion of gross fixed capital formation (GFCF), the share of FDI decreased from 11.22 per cent in 2020-21 to 6.45 per cent in 2023-24, which is nearly the same as recorded in 2013-14 when it stood at 6.20 per cent.

An important point to note here is that foreign funds inflows remain concentrated in a few states in the western, southern and northern parts of the country.

It must be highlighted here that out of the total FDI inflows in India during the period October 2019-to-March 2024, nearly half (49.5 per cent) went to just two states. These two states are Maharashtra and Gujarat.

Four states of the south—Karnataka, Tamil Nadu, Andhra Pradesh and Telangana—attracted 30.3 per cent of the total FDI inflows during the period under review while NCR Delhi and Haryana in the north attracted 17.8 per cent.

“Concentration of FDI in a few states suggests that better infrastructure (physical and human) and growth potential are key pre-conditions to attract higher FDI,” said Mr Devendra Kumar Pant, Chief Economist, India Ratings and Research.

“The states which have evolved their economic policies around the broader national level economic policies are able to take advantage and attract higher FDI inflows and thus there are better growth prospects for these state economies,” he added.

India’s Forex Reserves Hit All-Time High

The country’s foreign exchange reserves vaulted by USD 2.299-billion to a new high of USD 683.987-billion for the week ended August 30 of this year, the Reserve Bank of India (RBI) data showed.

The foreign exchange reserves had climbed up by USD 7.023-billion to a high of USD 681.688-billion in the previous reporting week.

Gold reserves moved northward by USD 862-million to USD 61.859-billion during the week ended August 30 of this year.

During the week, the Foreign Currency Assets (FCAs), a major component of the reserves, increased by USD 1.485-billion to USD 599.037-billion, the data showed.

Expressed in dollar terms, the FCAs include the effect of appreciation or depreciation of non-US units like the Euro, Pound and Japanese Yen held in the foreign exchange reserves. The Special Drawing Rights (SDRs) were up by USD 9-million to USD 18.468-billion.

The country’s reserve position with the International Monetary Fund (IMF) was down by USD 58-million to USD 4.622-billion in the reporting week, the apex bank’s data showed.

This milestone would further strengthen the country’s external sector resilience, the President of the PHD Chamber of Commerce and Industry, Mr Sanjeev Agrawal, said, Going ahead, coupled with the Reserve Bank of India’s robust policies and continued handholding by the government, the country’s strong forex will boost the economic growth trajectory by strengthening its position internationally, drawing in foreign investments and promoting domestic trade and industry, Mr Agrawal said.

GST Collection Climbs 10 Per Cent to Rs 1.75-lakh-cr in August

India’s Goods and Services Tax (GST) revenue collection in August of this year moved northward by 10 per cent to about Rs 1.75-lakh-crore, according to data released by the government.

The GST revenue in the same month last year (August 2023) stood at Rs 1.59-lakh-crore, while in July the collection was Rs 1.82-lakh-crore.

In August of this year, domestic revenue expanded 9.2 per cent to about Rs 1.25-lakh-crore. Gross GST revenue from import of goods were up 12.1 per cent to Rs 49,976-crore.

Refunds worth Rs 24,460-crore were issued during the month, registering an increase of 38 per cent over the year-ago period.

After adjusting refunds, net GST revenue increase was clocked at 6.5 per cent at Rs 1.5-lakh-crore during the month under review.

Amongst states, the western coastal state of Maharashtra collected the highest revenue at Rs 26,367-crore. Its neighbouring state in the south, Karnataka, came in second with a collection of Rs 12,344-crore.

Gujarat, another neighbouring state to the north of Maharashtra stood third with Rs 10,344-crore followed by Tamil Nadu at fourth position with a collection of Rs 10,181-crore.

From the northern region, Haryana collected Rs 8,623-crore.

Here, a point to note is that these state-wise collection figures do not include GST on import of goods.

Tyre Exports Up by 17 Per Cent in Q1: ATMA

The tyre exports from the country increased by 17 per cent on a Year-on-Year (YoY) basis to reach Rs 6,219-crore in the first-quarter of this fiscal (Q1 FY 25) with the United States (US) emerging as the largest market.

This was stated by industry body, the Automotive Tyre Manufacturers Association (ATMA).

Tyre exports increased by 17 per cent in Q1 FY 25—here, it must be pointed out that tyre exports had slid by 14 per cent in the corresponding quarter of the previous year, ATMA said, citing data just released by the country’s Ministry of Commerce.

ATMA chairman Mr Arnab Banerjee said in a statement that a sustained focus on R&D and development of advanced technology products aided by competitive pricing and branding efforts helped the country’s tyre manufacturers drive growth in exports despite a challenging environment.

“Improving demand prospects in key export destinations and expected monetary easing also helped growth”, Mr Banerjee added.

The increase in exports is a testament to the Indian tyre industry’s enhanced integration with global supply-chains, he said.

According to Mr Banerjee, “the globally aligned regulatory environment in the country for manufacturing of tyres also augurs well for increasing the addressable market for Indian manufactured tyres.”

In the first-quarter of this fiscal, the United States was the largest export destination for Indian manufactured tyres—it accounted for a 17 per cent share.

Other large export markets included Brazil and the three European nations of Germany, France and Italy, the statement said.

A point that requires highlighting here is that Indian manufactured tyres are being exported to over 170 countries across the world.

A point of interest here is that the highest growth in exports volumes of 38 per cent was registered in motor-cycle tyres in Q1 followed by 31 per cent in Truck and Bus Radial (TBR) tyres, it added.

Downside risks to Indian tyre exports continue to exist such as global supply-chain disruptions, geo-political risks, the West Asian crisis and rising shipping costs, Mr Banerjee pointed out.