Millennium Post

FPI inflow hits $12 billion

Overseas investors have poured in $2.5 billion into the Indian capital markets so far this month, taking the total inflow to around $12 billion since the beginning of the year.

Analysts expect the inflows to accelerate further going ahead following the passage of bills related to insurance, coal allocation and mining and assurances in the Union Budget to revisit controversial issues like General Anti-Avoidance Rule (GAAR).

Foreign Portfolio Investors (FPIs) have bought shares worth a net Rs 9,931 crore ($1.6 billion) during March 2-20 period. In the debt segment, their net inflows stand at Rs 5,788 crore ($931 million)
taking the total to Rs 15,719 crore ($2.53 billion), as per the data compiled by Central Depository
Services Ltd.

The inflows take the foreign investment level in the country's capital markets (equity and debt segments) to Rs 73,971 crore (approx. $12 billion) so far this year.

Market participants attributed the robust inflows to positive investor sentiment driven by the government's announcement of several reform measures.

Besides, Finance Minister Arun Jaitley announced a slew of measures to attract overseas investment in the country in the recent Union Budget.

In 2014, the net inflows by overseas investors in debt markets was Rs 1.59 lakh crore, while the figure for equities stood at Rs 97,054 crore. Overall net investment by foreign investors stood at Rs 2.56 lakh crore last year.

To soothe investors' nerves, Jaitley had deferred the controversial GAAR by two years, saying that its immediate applicability can create 'panic' in markets.

FDI via approval route surges 162% to $1.91 bn

Foreign Direct Investment into India through the approval route shot up 162 per cent to $1.91 billion in the first 10 months of the current fiscal, indicating that government's effort to improve ease of doing business and relaxation in FDI norms may be yielding results.

During the full 2013-14 fiscal, India had received $1.18 billion FDI through the government approval route, according to the figures collated by the Department of Industrial Policy and Promotion (DIPP).
"The FDI figures during April-January period clearly reflect that the government is giving faster clearance to the proposals. It is reacting fast on the needs of foreign investors," said a senior official in the Commerce and Industry Ministry. Some experts think likewise.

Head of Tax and expert on FDI with corporate law firm Amarchand & Mangaldas Krishan Malhotra said: "Relaxation of FDI norms in some sectors and steps to improve ease of doing business have started generating positive environment in the country. "Foreign investors are very positive
about India.

Sentiments are also improving. There is lot of positivity in the business environment." Although in most of the sectors foreign investment is permitted through automatic route, FDI in few sectors including pharmaceutical, defence and retail are permitted only through the approval of Foreign Investment Promotion Board (FIPB).

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