Similarly, inflows from Cyprus contracted by over 95 per cent to USD 35 million during the six-month period as against USD 764 million in April-September 2022-23.
Experts have attributed the sharp fall in FDI from Cyprus and Cayman Islands to a hightened scrutiny of applications.
Anjali Malhotra, Partner – Regulatory, Nangia Andersen India said FDI inflows from other tax havens such as Singapore, and the UAE have also lost their sheen along with Cayman Islands and Cyprus during first half of 2023-24.
“…the recent decline in investment from Cayman Islands and Cyprus may be attributed to enhanced scrutiny of these investments,” Malhotra said adding the recent decline in investment from tax havens is also in line with an overall fall in FDI during first half of 2023-24.
The reason for overall decline may be attributed to increased interest rates owing to high inflation in the US and other western nations exacerbated by geo-political situations in Eastern Europe and West Asia, she said. Sanjay Kumar, Partner, Deloitte India, said it is worth noting that the overall FDI outflow from Cyprus to the world has been declining at a CAGR (compound annual growth rate) of 62 per cent. For Cayman Islands, Kumar said that in October this year, the region was removed from the grey list by FATF (Financial Action Task Force) and this may result into positive FDI flow from Cayman Islands in coming times.
FDI into India declined 24 per cent to USD 20.48 billion in April-September 2023-24, dragged by lower inflows in computer hardware and software, telecom, auto and pharma.