India expected to see strong FDI inflows in coming quarters: Experts

Foreign direct investments (FDI) surged by 47.8% to US$ 16.17 billion during April-June 2024, with expectations for further acceleration due to a potential Federal Reserve rate cut, a modest growth outlook in the US, and India’s favourable economic conditions. Investment destinations have diversified over the decade, with sectors such as power, construction, healthcare, chemicals, and non-conventional energy becoming increasingly attractive, according to Economist at Deloitte India Ms. Rumki Majumdar.

She anticipates strong FDI will continue, driven by the upcoming US election results, a potential Fed rate cut, and India's robust economic outlook. Partner at IndusLaw, Mr. Aakash Dasgupta, noted that while FDI inflows have notably increased compared to the same period last year, the previous quarter’s FDI was unusually low. Current inflows, therefore, are approaching pre-last year levels and reflect a positive correction. Factors contributing to mounting deployment pressures on foreign institutional investors’ dry powder, strong performance in Indian capital markets, and favourable amendments to the FDI policy, such as allowing 100% automatic route investment in the space sector. Despite the need to monitor the impact of upcoming US elections on FDI flows, the overall outlook remains positive. Government data indicated that overseas inflows rose to US$ 5.85 billion in May and US$ 5.41 billion in June, compared to US$ 2.67 billion and US$ 3.16 billion in the same months last year. FDI inflows in April slightly decreased to US$ 4.91 billion from US$ 5.1 billion in April 2023. Total FDI, including equity inflows, reinvested earnings, and other capital, grew by 28% to US$ 22.49 billion during the first quarter of this fiscal year, up from US$ 17.56 billion in April-June 2023. FDI equity inflows increased from major countries such as Mauritius, Singapore, the US, the Netherlands, the UAE, the Cayman Islands, and Cyprus.

Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.