Net FDI inflows on track to top $30 bn this fiscal: Nomura

Foreign direct investment inflows to India are expected to gain further momentum and net FDI inflows to the country could cross $30 billion mark this fiscal year driven by improved investor sentiment, a Nomura report says.

According to the Japanese brokerage firm, net FDI inflows is on track to top $30 billion and this would reduce India's external sector vulnerability.

Net FDI into India rose sharply to $11.5 billion in the first four months of FY15 (April-July) from $8.4 billion over the same period in FY14, the report said.

"Based on the current run rate, we estimate that net FDI inflows could rise above $30 billion in FY15 (amounting to 1.4% of GDP)," Nomura said in a research note.

Citing the various factors that are likely to boost FDI inflows, Nomura said: "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."

Sectorwise, telecom, pharma and financial and business services were the largest recipients over the first three months of this fiscal year.

"In our view, the large inflow in July could be partly due to fund-raising in the e-commerce sector," it added.

According to official data, FDI flows to India surged by about 34% to $1.92 billion in June.

During April-June in this fiscal, the foreign inflows recorded a growth of 34 per cent. FDI was at $7.23 billion in April-June, 2014-15 compared to $5.39 billion in April- June 2013-14, as per the data by Department of Industrial Policy and Promotion.

In 2013-14, FDI inflows in India were $24.29 billion against $22.42 billion in 2012-13.

The government is taking more steps to boost FDI in the country. It has raised the foreign investment limit to 49% in defence manufacturing and relaxed the policy in construction sector. The government has also proposed to increase the FDI cap in insurance to 49%.