FDI rose by 111% to $4.66 bn in May

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FDI rose by 111% to $4.66 bn in May
Foreign Direct Investment (FDI) took an about turn into the country after a decade. FDI inflows rose by 111% in May this year to $4.66 billion (Rs 20,970 crore) as against $2.21 billion in May last year. This is the second-highest monthly inflow in 11 years since April 2000.

As per the data released by the Department of Industrial Policy and Promotion (DIPP), combined inflow over April and May through FDI has jumped by 77% to $7.79 billion.

During 2010-11 fiscal, FDI dropped 25% to $ 19.4 billion. Investors were diffident last year despite sound growth at 8% due to several economic factors, but showed faith again in Indian Economy and came with large inflows.

“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.

India has attracted a good share of acquisitions this year and FDI is likely to spurt, as many more acquisitions have been given green signal.

The deals include mergers and acquisitions, qualified institutional placements and private equity deals. These include the acquisition by Mundra Port of Abbot Point worth $1.96 billion and Religare-Fortis deal.

The proposed tie up between BP and Reliance and Vodafone buying share of Essar could alone result in an inflow of approximately $ 12 billion.

Tie-up between BP and Reliance could come with inflow of over $7 billion, with total investment over the years adding up to $20 billion. Similarly, Vodafone's purchase of Essar's stake recently, at around $5 billion is also another great move into India.

Stock markets are not able to attract FII inflows so continued inflows from FDI could help in paying for the current account deficit (CAD) at the end of the year. The CAD is expected to be in the range of 2.5-3% of GDP for FY12.

Upcoming deals like Cairn -Vedanta of around $8-9 billion and approvals given to Korean steelmaker POSCO are also likely to boost FDI this year.

OneIndia Money

Read more about: fdi, vodafone, economy, investment
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