$5.65 bn and counting: It's an FDI party out there

There is so much of uncertainty roiling the global markets. But amid all the gloom, India has reasons to smile. The foreign direct investment (FDI) figures for June have just come in and the government looks all buoyed up. The data released by the commerce and industry ministry suggest that FDI into the country shot up by an eye-popping 310 percent in June 2011 to $5.65 billion, the highest monthly inflow in the last 11 years. In June 2010, FDI inflow into the country read $1.38 billion.

The June torrent follows an FDI gush in May 2011, worth $4.66 billion, a jump of 111 percent over the same month previous year. Total FDI flow for the whole of previous year stood at $25 billion. Compared to this, FDI equity inflows for the first quarter of the current fiscal have touched the $13.441 billion mark, a jump of 133 percent over the corresponding period of the financial year.

A major chunk of this investment can be explained by two mega deals during the quarter under review – the $5.5-billion Essar-Vodafone deal and the top-notch British Petroleum $7.2-billion investment into Reliance’s oil and gas assets. Vodafone had decided to buy out their erstwhile partner Essar in their telecom venture while British Petroleum’s FDI investment was cleared during the first quarter of the current fiscal.

FDI figures which were hovering around $35 billion levels came down to $25 billion during the previous year. The mega deals announced during the current quarter are likely to bring FDIs back to its average of $35 billion.