FY21 FDI inflows up 10%, highest jump in investments from Saudi Arabia

According to the government, India received the highest-ever total foreign direct investment (FDI) inflow of $81.72 billion in FY21, up 10% from 2019-20. Inflows of equities, earnings reinvested, and other capital make up total FDI.

Singapore led the way with a 19 percent increase in foreign direct investment equity inflows over the previous fiscal year, followed by the United States and Mauritius. Saudi Arabia, on the other hand, saw the largest rise in foreign investment of $2.81 billion in FY21 compared to $89.93 million the previous year.

Saudi Arabia is the top investor in terms of percentage rise among the top ten countries in 2020-21, according to the government.

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FDI of $59.64 billion were recorded in FY21, up from $49.98 billion the previous year.

The commerce and industry ministry stated in a statement that “measures implemented by the government on the fronts of Foreign investment policy changes, investment facilitation, and ease of doing business have resulted in higher foreign investment inflows into the country.”

According to the report, foreign investment equity inflows from the US and the UK increased by 227 percent and 44 percent, respectively.

According to the statement, computer software and hardware emerged as the leading sector with roughly 44 percent of total Foreign investment equity investment, followed by Construction (Infrastructure) Activities (13 percent) and Services Sector (8 percent).

Gujarat, Karnataka, and Delhi are the top recipients of FDI in the Computer Software & Hardware sector

According to the statement, equity in the primary sectors of construction (infrastructure), computer software & hardware, rubber goods, retail trading, drugs & pharmaceuticals, and electrical equipment increased by more than 100 percent in 2020-21 compared to the previous year.

Gujarat is the biggest recipient state for foreign investment equity inflows this year, accounting for 37% of total foreign investment equity inflows, followed by Maharashtra (27%), and Karnataka (27%). (13 percent ).

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As more and more Indian entities are bringing in foreign investors in the lure of cheaper, easily available, and sufficient funds Foreign Direct Investment (FDI) has become a routine affair in the Indian economy.
Similarly, Overseas Direct Investment (ODI) which means Indian Entities investing outside India have also increased in number manifold (though still small in number as compared to FDI).

Foreign Liabilities and Assets (FLA) Return is an Annual Return that must be filed by entities that have received FDI and/or made overseas investments in any of the previous years, including the current year, i.e., entities with Foreign Assets or Liabilities on their Balance Sheets.

Annual return on Foreign Liabilities and Assets (FLA) is required to be submitted by all the companies which have received FDI and/or made overseas investment in any of the previous year(s), including the current year (July 15 every year).

To monitor these transactions RBI have come up a few compliances, one such being FLA.

FLA is an annual return prescribed under FEMA regulations and is applicable to all companies/Firms who have received FDI during the year or who have made ODI during the year and these transactions are outstanding at the end of the year. This means that the FDI/ODI has to be still in the books of the entity and not squared off during the year.

The due date is 15th July (Extended to 31st July 2020 this year). In case the entity’s books are still unaudited then provisional figures have to be uploaded by the due date. In case there are any changes after the filing of provisional figures then the company shall file a revised FLA return based on audited accounts by the end – September.

The return has to be mailed to the prescribed email of the RBI by the CS/CFO/Directors of the company from the registered email id.

Penalty of thrice the amount of sum of FDI/ODI or Rs 2 lakhs with additional Rs 5000 per day if delay is continuing.