India saw the second-highest FDI equity inflows of $4.6 billion over 11 years for May this year. More monthly inflows than May were last seen in April 2000.
However, with FDI inflows slowing in the last year, concerns persist about the investment climate in India. So, it remains to be seen if the upswing seen in May sustains or it is just a blip.
The May figures are an increase of nearly 111% over the FDI equity inflows of $ 2.2 billion received in the same month last year and also the highest inflow in the month of May over 11 years.
The Commerce Ministry feels that 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.
The total FDI equity inflows, in the first two months of the current financial year (i.e. April and May, 2011), are $7.785 billion, representing an increase of around 77% over the FDI equity inflows of $ 4.392 billion for the corresponding period last year.
It says that recent investments are an indicator of this positive trend. For example, the proposed tie-up between BP and Reliance, with a likely FDI of over $ 7 billion, could possibly be the single largest FDI into any emerging market.
Similarly, Vodafone's purchase of Essar's stake, at around $ 5 billion, is also an indicator of continuing investor confidence.
The approvals given to POSCO and to the Cairn-Vedanta acquisition (a deal of around $8-9 billion) are also likely to increase FDI this year.
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