Foreign Direct Investment (FDI) in May 2011 inflows jumped 111 per cent at $4.664 billion

According to the Finance Ministry’s data released on 4 July 2011, Foreign Direct Investment (FDI) in India saw an unprecedented growth in May with the inflows jumping nearly 111 per cent at $4.664 billion, the second highest FDI inflow in any month in the last 11 years. According to a statement released by the ministry of commerce, FDI in April-May 2010 had stood at $2.213 billion.

During the first two months of the current fiscal 2011-12 the foreign direct investments in the country stood a whopping increased of around 77 per cent as against the inflow during the corresponding period in 2010.

 Recent investments like $7 billion BP-Reliance tie-up are indicative of a positive trend. Vodafone's purchase of Essar's stake of around $5 billion is also an indicator of continuing investor confidence in India. The recent trend of dip in FDI inflows thus appears to have been reversed in the current financial year.

The last fiscal witnessed a 25 per cent dip in FDI inflows amid uneven global recovery from the recession of 2008. A slew of measures were taken by the government to arrest the fall and boost investor confidence started showing results. Also the approvals given to Posco and to the Cairn-Vedanta acquisition are also likely to further increase FDI in 2011.

The ministry clarified foreign investment rules in a move to ease the regulatory burden for the government while at the same time simplified the procedures as well. As per the revised rules, only proposals involving total FDI of more than Rs 1,200 crores would be required to be placed before Cabinet Committee on Economic Affairs (CCEA) for approval.

The increase in FDI inflow in May 2011 represents an increase of nearly 111 per cent over the FDI equity inflows of $2.213 billion received in the same month in 2010.