Nomura expects India's net FDI inflows to rise above US$30 billion in FY2015

FDI inflows would reduce India's external sector vulnerability by providing a more stable source of financing

Nomura India expects FDI inflows into India to gain further momentum. Nomura observes that investor sentiment has improved, domestic confidence has revived, growth is on a recovery path and the government is focused on improving the ease of doing business.

Based on the current run rate, Nomura estimates that net FDI inflows could rise above US$ 30bn in FY2015 (1.4% of GDP) from US$ 22bn in FY2014 (1.1% of GDP). This would reduce India's external sector vulnerability by providing a more stable source of financing.

Net foreign direct investment (FDI) into India rose sharply to US$ 11.5bn in the first four months of FY15 (April-July) from US$ 8.4bn over the same period in FY14.

By sector, telecom, pharma and financial & business services were the largest recipients over the first three months. In our view, the large inflow in July could be partly due to fundraising in the e-commerce sector.

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