Foreign direct investment (FDI) in India’s renewable energy sector has been gradually increasing over the past five financial years. The FDI inflow has increased significantly since the formation of Invest India, a program formed in 2009 under Section 25 of the Companies Act 1956 for the promotion of foreign investment in the domestic market.

Answering a question raised in the Lok Sabha, Commerce Minister Piyush Goyal informed the House that in the non-conventional energy sector, the FDI inflow during FY 2014-15 stood at $615.95 million, which increased to $776.51 million in the next fiscal year. In FY 2016-17, the FDI in the domestic market reached $783.57 million, and it went up to $1.2 billion in FY 2017-18. Further, the inflow increased to $1.44 billion in FY 2018-19.

In the past five years, the FDI inflow into the non-conventional energy sector has nearly been at par with that of the Indian power sector. Overall, in the past five fiscal years, the Indian power sector has attracted FDI totaling $5.4 billion while non-conventional energy sector attracted FDI totaling $4.8 billion.

The FDI inflow is also representative of the fast-paced growth of the Indian power sector, especially in the renewable energy segment. In 2018, Mercom reported that the investment made into India’s renewable energy projects was more than the conventional energy (fossil-fuel based) projects in 2017.

Global investment in the renewable energy sector has gone up by 55% since 2010, according to the World Investment Report 2019 released by the International Energy Agency (IEA). According to the report, investment in India’s energy sector has grown the most over the past three years.

Mercom recently reported that in 2018, investments in the Indian solar sector totaled approximately $9.8 billion compared to 2017, in which almost $11.5 billion flowed into the Indian solar sector. The year 2018 witnessed a decline of 15% in investments year-over-year (YoY).

According to Mercom’s Q1 2019 Solar Funding and M&A Report, the solar sector received $2.8 billion in corporate funding globally, including venture capital funding, public market, and debt financing. Activity across venture capital funding, public market, and debt financing were up 10% in Q1 2019, compared to Q1 of 2018.

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