FDI into India For June Rises by 310 Percent From Same Month Last Year

By: EW News Desk Team   Date: 9 August 2011

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09 August 2011

Foreign Direct Investment equity inflow into India in June this year rose by more than 310 percent from the same month last year, according to data released by the Indian Ministry of Industry Commerce on Monday.

The FDI recorded for June this year reached US$5.656 billion, compared to US$1.380 billion in the same month last year – and was the second highest monthly inflow ever recorded by the Indian economy in the last 11 years.

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"The figures indicate the trend of high FDI equity inflows since the beginning of the present financial year (on April 1, 2011) are being maintained," said India’s Commerce Industry in a press release cited by AFP. 

The numbers also reflected a revival of foreign investment interest in India. In the last financial year to March 2011, FDI inflows slid 25 percent to $19.43 billion on the back of an uncertain global climate following the 2008 global financial crisis. However, in the April-June period of the current fiscal year to March 2012, FDI rose by 133 percent to $13.44 billion from $5.77 billion in the same period last year.

One of the likely causes for the spike could be due to some of the mega deals announced recently, such as the $5.5 billion sale of Essar's stake in Vodafone Essar to the British partner and British Petroleum's $7.2 billion investment into Reliance's oil and gas assets.

The increase is likely to be come as a major relief to the Government, which had been puzzled by the drying up of foreign investment into India during the last financial year.

N.R. Bhanmurthy of the National Institute of Public Finance and Policy, on the other hand also urged caution at the latest data.

“The sudden surge in inflow could be due to government’s effort to review double taxation treaty,” said Bhanmurthy to The Telegraph in India. “Perhaps funds are coming back before the curbs come into play. There has not been any big-ticket investment during the period and the economic numbers have also not been encouraging.”
 

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