The cumulative foreign direct investment (FDI) in April-May stood at $10.02 billion compared with $8.12 billion in the corresponding period last year. This translated into an increase of 23 per cent in the first two months of the current fiscal, according to the information shared in a Lok Sabha reply by commerce and industry minister Nirmala Sitharaman. When the NDA government assumed power in 2014, India's FDI flows were around $36 billion and since then it has been increasing. The total FDI inflows in financial year 2016/17 stood at $60 billion, increasing 8 per cent from 2015/16.
Some of key reforms initiatives proved instrumental for their growth. FDI got a big boost when their limits were enhanced in critical sectors like insurance and defence. This was instrumental in foreign investors committing more money for their Indian operations. Except for a small negative list, most sectors are open for 100 per cent FDI under the automatic route. According to a recent note by Angel Broking, "The government was instrumental in removing most of the products from the approval list to the automatic approval list, which made the entire task of foreign investors much easier." In the last Union Budget, the government has also scrapped the Foreign Investment Promotion Board (FIPB). After the abolition of FIPB the work of monitoring the compliance with conditions under the FDI approvals, including the past cases approved by erstwhile FIPB, has been assigned to the concerned administrative ministries or departments.
With easing of FDI norms and an improvement in the "Ease of Doing Business" in India, we could see FDI growing consistently and that would ensure that the gap with FPI is maintained, the blog adds.