PM Modi’s US visit: Inbound FDI rises, so does Indian investment in US

Source: The post is based on the article “PM Modi’s US visit: Inbound FDI rises, so does Indian investment in US” published in Business Standard on 21st June 2023

What is the News?

Closer economic ties are on the agenda as the Indian Prime Minister makes his first State visit to the US. 

In this context, let us look at the data related to trade and capital inflows between India and the USA.

What is the data related to trade and capital inflows between India and the USA?

Foreign Direct Investment(FDI): There is more money coming into India to fund new factories and set up ventures through foreign direct investment (FDI) than before. 

– The average annual US FDI flows in the five years leading up to 2018-19 was $2.7 billion. This has increased to $8.7 billion in the four years since then. 

– A similar outward flow into the US shows up in the overseas direct investment data. This also includes debts, such as loans. The capital outflows averaged $1.7 billion in the five years leading up to 2018-19. This has increased to an average of $3.2 billion since 2019-20.

Foreign Portfolio Investors(FPI): The US tops in terms of foreign portfolio flows. This is money that US mutual funds and other entities invest by buying Indian securities, such as shares on the stock market. 

– The US is the largest FPI investor in India, accounting for around Rs 38 of every Rs 100 worth of FPI holdings.

India’s imports and exports to the US: India exports more to the US than it imports. The exports in 2022-23 were $79 billion, compared to imports of $50 billion. 

– Imports have risen a little faster than exports in the last five years. Imports rose 89% since 2017- 18 while exports were up 64% 

– India’s imports from the US are largely made up of a few categories, including crude, petroleum products, coal and others. The top five accounted for around 49 per cent of imports in 2022-23.

– The export basket was similar. Pharmaceutical products and ready-made cotton garments and accessories were among the major exports. The top five exports accounted for 36% of the total exports.