FDI inflows soar to $4.66 bn in May

Reversing a declining trend, foreign direct investment (FDI) into the country has more than doubled to $4.66 billion in May year-on-year. This is the highest FDI inflow in 11 years since April 2000, reflecting investors’ confidence in the economy despite fears of slowdown in some segments.

The approvals given to Korean steelmaker POSCO and to the Cairn-Vedanta acquisition that entailed a deal of around $8-9 billion, are also likely to “substantially increase FDI this year”, while the proposed tie-up between BP and Reliance, with FDI of over $7 billion might turn out to be the single largest FDI into any emerging market.

Also, Vodafone’s purchase of Essar’s stake at around $ 5 billion, is an indicator of “continuing investor confidence in India,” a statement released by the Department of Industrial Policy and Promotion (DIPP) said.

FDI inflows in May this financial year represent a growth of 111 per cent against $2.21 billion received in May last financial year, DIPP said. “The recent trend of dip in FDI inflows appears to have been reversed in the current financial year, where a significant upward trend in the FDI inflows is evident ... Recent investments are an indicator of this positive trend,” DIPP said.

FDI inflows in the first two months of the financial year through May topped $7.78 billion, up 77 per cent from $4.40 billion in the same period last financial year. FDI into the country declined 9 per cent to $6.51 billion during January-April 2011 over the same period last year. In January-April 2010, the country received FDI worth $7.14 billion. In 2010-2011, total FDI inflows into the country reached $19.42 billion compared to $25.83 billion in 2009-2010.

The government has brought out a consolidated FDI policy by doing away with periodic Press Notes to augment inflows into the country.