New Delhi: Foreign direct investment inflows to India are expected to gain further momentum and net FDI inflows to the country could cross USD 30 billion mark this fiscal year driven by improved investor sentiment, a Nomura report says.
According to the Japanese brokerage firm, net FDI inflows is on track to top USD 30 billion and this would reduce India's external sector vulnerability.
Net FDI into India rose sharply to USD 11.5 billion in the first four months of FY15 (April-July) from USD 8.4 billion over the same period in FY14, the report said.
"Based on the current run rate, we estimate that net FDI inflows could rise above USD 30 billion in FY15 (amounting to 1.4 percent of GDP)," Nomura said in a research note.
Citing the various factors that are likely to boost FDI inflows, Nomura said: "investor sentiment has improved, domestic confidence has revived, growth is on a recovery path and the government is focused on improving the ease of doing business."
Sectorwise, telecom, pharma and financial and business services were the largest recipients over the first three months of this fiscal year.
"In our view, the large inflow in July could be partly due to fund-raising in the e-commerce sector," it added.
According to official data, FDI flows to India surged by about 34 percent to USD 1.92 billion in June.
During April-June in this fiscal, the foreign inflows recorded a growth of 34 percent. FDI was at USD 7.23 billion in April-June, 2014-15 compared to USD 5.39 billion in April- June 2013-14, as per the data by
Department of Industrial Policy and Promotion.
In 2013-14, FDI inflows in India were USD 24.29 billion against USD 22.42 billion in 2012-13.
The government is taking more steps to boost FDI in the country. It has raised the foreign investment limit to 49 percent in defence manufacturing and relaxed the policy in construction sector. The government has also proposed to increase the FDI cap in insurance to 49 percent.
