THE continuous slide in FDI inflows has finally come to a halt. The
total FDI equity inflows, in the first two months of the current financial year,
are USD 7.785 billion, representing an increase of around 77% over the FDI
equity inflows of USD 4.392 billion for the corresponding period last
year.
The
FDI equity inflows of USD 4.664 billion, received in the month of May, 2011,
represent the second highest FDI equity inflow, received in any month, for the
last eleven financial years (i.e. since April, 2000). They also represent an
increase of nearly 111% over the FDI equity inflows of US 2.213 billion received
in the same month last year (i.e. May, 2010), as also the highest FDI equity
inflow, in the last eleven financial years (i.e. since the financial year
2000-2001), received in the month of May.
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 USD 7
billion, could possibly be the single largest FDI into any emerging market.
Similarly, Vodafone’s purchase of Essar’s stake, at around USD 5 billion, is
also an indicator of continuing investor confidence in India. The approvals
given to POSCO and to the Cairn-Vedanta acquisition (a deal of around US $ 8 - 9
billion) are also likely to substantially increase FDI this year.
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