The downward trend in foreign direct investment inflow seems to have been reversed.
FDI equity inflows to India touched $4.664 billion in May, the second highest FDI equity inflow received in any month for the last 11 financial years.
“The recent trend of dip in foreign direct investment appears to have been reversed in the current financial year, where a significant upward trend in the FDI inflows is evident,” a Commerce Ministry release said.
The total FDI equity inflows for April and May 2011 period stood at $7.785 billion, an increase of around 77 per cent over the $4.392 billion for the corresponding period last year, an official release said.
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 in India. The approvals given to Posco and to the Cairn-Vedanta acquisition (a deal of around $8-9 billion) are also likely to substantially increase FDI this year.
The release also said there has been a continuing and sustained effort to make the FDI policy more liberal and investor-friendly.
With the aim of simplifying FDI policy, promoting clarity of understanding of foreign investment rules among foreign investors/sectoral regulators and having a single policy platform, so as to ease the regulatory burden for Government, a major exercise of integrating all existing regulations on FDI, into one consolidated document, was undertaken, recently.
The process of consolidation involved integration of 178 Press Notes, covering various aspects of FDI policy, which had been issued since 1991, as also a large number of other regulations governing FDI. The document was released as ‘Circular 1 of 2010', on 31 March, 2010, as per the commitment made.