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FDI Equity Inflows in Power Sector from 2000-01 to 2015-16

October 7, 2016

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Foreign direct investment (FDI) is an investment made by an organization/entity in one country in an industrial/business activity in another country. FDI can take place in the form of establishing new business operations from scratch or acquiring existing business assets in the other country. FDI includes mergers and acquisitions, building new facilities, expansion of existing production capacity, etc. FDI usually involves control/participation in management, joint-venture, management expertise and technology transfer. It excludes investment through purchase of securities or foreign portfolio investment, a passive investment in the securities of another country e.g. shares and bonds.

India has restrictions or caps on FDI in various sectors like aviation, insurance, banks etc.  India is the second most important FDI destination after China. The sectors that have attracted higher FDI inflows in India are services, telecommunication, construction activities and computer software and hardware. Mauritius, Singapore, UK, USA and Japan are the leading sources of FDI for India. In recent years, India has attracted a lot of FDI as a result of liberal FDI policies, strong economic fundamentals, market size etc. One of the important sectors attracting FDI in India is Power sector.

The amount of FDI in Power sector was $ 89.42 million in 2000-01. The share of FDI in Power sector in total FDI in India was 3.76% in 2000-01. The amount of FDI in Power sector was $ 757.44 million in 2001-02. It increased by $ 668.02 million as compared to 2000-01. In percentage terms, the increase was 747.06%. The share of FDI in Power sector in total FDI in India was 18.81% in 2001-02.

The amount of FDI in Power sector was $ 72.69 million in 2005-06. It increased by $ 29.32 million as compared to 2004-05. In percentage terms, the increase was 67.6%. The share of FDI in Power sector in total FDI in India was 1.31% in 2005-06. The amount of FDI in Power sector was $ 1271.77 million in 2010-11. It decreased by $ -0.02 million as compared to 2009-10. In percentage terms, the decrease was negligible. The share of FDI in Power sector in total FDI in India was 5.95% in 2010-11.

The amount of FDI in Power sector was $ 707.04 million in 2014-15. It decreased by $ -359.04 million as compared to 2013-14. In percentage terms, the decrease was -33.68%. The share of FDI in Power sector in total FDI in India was 2.29% in 2014-15. The amount of FDI in Power sector was $ 868.8 million in 2015-16. It increased by $ 161.76 million as compared to 2014-15. In percentage terms, the increase was 22.88%. The share of FDI in Power sector in total FDI in India was 2.17% in 2015-16.

The maximum annual growth in FDI in Power sector of $ 831.53 million was recorded in the year 2007-08 during the period under consideration. The maximum annual growth in percentage terms in FDI in Power sector of 747.06% was recorded in the year 2001-02 during the period under consideration. The maximum share of FDI in Power sector in total FDI in India of 18.81% was also recorded in the year 2001-02 during the period under consideration.

Therefore, it is evident from the foregone analysis that there has been a lot of volatility in the annual FDI flows in Power sector during the period under consideration i.e. 2000-01 to 2015-16.

Note: Amount in US$ million.

Resource Title: Financial Year wise FDI Equity Inflows from 2000-01 to 2015-16

Link of Catalog used: https://data.gov.in/catalog/foreign-direct-investment-fdi-equity-inflows

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Source: Ministry of Commerce and Industry, Department of Industrial Policy and Promotion
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