23/09/2022
On 22nd September, 2022 Reserve Bank of India released the provisional results of the 2021-221 round of the annual census on foreign liabilities and assets (FLA) covering cross-border liabilities and assets of the entities with inward/outward direct investment (DI). These entities include companies, limited liability partnerships (LLPs), alternative investment funds (AIFs) and partnership firms.
Out of the 34,079 entities which responded in the latest census round, 30,754 reported foreign direct investment (FDI) and/or overseas direct investment (ODI) in their balance sheet as at end-March 2022. Of these entities, 26,670 had also reported in the previous census round and 4,084 were newly reporting in the current round. More than three-fourths of the companies that reported inward direct investment were subsidiaries of foreign companies (i.e., single foreign investor holding more than 50 per cent of total FDI equity).
The census captures detailed information on (a) market value of liabilities and assets of Indian DI entities arising on account of cross-border direct and other investments; and (b) other business parameters (activity sector, sales, purchase, exports and imports). The variations in outstanding assets / liabilities between the beginning and end of a financial year would be different from flows recorded in India’s balance of payments (BoP) statistics during the year, as the former would also include valuation changes due to price and exchange rate movements.
The main findings have been summarized below:
1. Nearly 97 per cent of the responding entities were unlisted: they accounted for the bulk of FDI equity capital in India.
2. Non-financial companies continued to receive most of the FDI equity (at face value)
3. During 2021-22, the market value of FDI in India increased by 17.3 per cent in the rupee terms; FDI for listed and unlisted2 companies increased by 17.0 per cent and 17.7 per cent, respectively.
4. As the growth in market value of FDI outpaced that of ODI, the ratio of inward to outward direct investment increased to 6.3 times in March 2022 as compared with 5.6 times a year ago and 4.7 times two years ago.
5. Other investment liabilities {viz., trade credit, loans, currency & deposits and other payable with unrelated (third party) non-resident entities} recorded a rise during 2021-22 and the corresponding overseas assets covered 44.2 per cent of such liabilities.
6. Mauritius, the United States, Singapore and the United Kingdom together accounted for over 60 per cent of FDI in India. In case of ODI, Singapore continued to be the most popular destination followed by the United States and Netherlands.
7. Manufacturing sector attracted the largest share of FDI equity, both at market value as well as at face value.
8. In the services sector, ‘information & communication’ and ‘financial & insurance activities’ attracted a substantial portion of the FDI.
9. Sales and purchases of foreign subsidiary entities in India increased by 31.0 per cent and 37.3 per cent, respectively, in the rupee terms during 2021-22.
10. Foreign subsidiaries in India maintained strong external trade links: exports and imports accounted for nearly a third of their sales and purchases, respectively. ‘Information and communication’ sector had the highest export intensity (74.2 per cent share in total sales).
11. Overseas subsidiaries of Indian companies recorded over 40 per cent expansion in business during 2021-22 in the rupee terms. They also maintained outward looking and their export-to-sales and import-to-purchase ratios stood at 50.1 per cent and 61.5 per cent, respectively, during 2021-22.
12. The difference in the purchase-to-sales ratio of overseas subsidiaries of Indian companies (82.8 per cent) as compared with that of foreign subsidiaries in India (74.0 per cent) reflects the divergence in their focus areas, nature of markets and patterns of value addition.
Source: www.rbi.org.in
