‘India FDI lean period to give way to gains’

India can expect a steady flow of FDI after a lean period,according to research firm Nomura India.

India can expect a steady flow of foreign direct investment (FDI) after a lean period,according to research firm Nomura India.

After falling 25 per cent last fiscal year,FDI inflows into India are finally picking up. Gross FDI inflows rose 43 per cent year-on-year to USD 3.1 billion in April,the highest monthly inflow since August 2009, Nomura India said in a

statement.

The rise is broad-based,with the strongest inflows into the services and manufacturing sectors, it added.

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Nomura which said India was showing signs of recovering in the FDI segment,suggested simplification and fast-tracking of the approval process,a relaxation of the rules and a possible increase in the FDI ownership ceiling in some key sectors to boost India’s prospects to attract more FDI.

Our analysis of historical FDI cycles also indicates that it takes about three years for FDI inflows to return to a pre-crisis peak. The slump in FDI inflows since the Q3 2008 peak has broadly followed this trend and the recent pickup is consistent with our view that FDI inflows are moving from a consolidation to a recovery phase, Nomura said.

FDI inflows should be supported by several large FDI proposals in the oil and gas,metal and telecom sectors, it said.