India Back on Net FDI Inflow Path in June After a Blip in May

India recorded a net FDI inflow of $1.35 billion in June, reversing an outflow of $79 million in May, according to the August bulletin released by the Reserve Bank of India. This was supported by a jump in gross inflows during the month. 

Gross inward FDI increased to $9.3 billion in June from $6.07 billion in May, although it remained below $9.6 billion a year earlier. The RBI said the improvement in net FDI was supported by higher gross inflows and a slowdown in the growth of outward FDI.

Singapore, the Netherlands, the US and Canada accounted for around 74% of total equity inflows in June, with manufacturing receiving the largest share, followed by electricity generation, computer and communication services. These sectors together accounted for 76% of total inflows during the month.

For the April-June quarter, gross inward FDI rose 14.8% on-year to $30.7 billion, while net FDI increased to $7.9 billion from $4.8 billion a year earlier. Net outward FDI, meanwhile, rose a mere 1.4% to $9.3 billion.

Meanwhile, outward remittances by resident Indians under the Liberalised Remittance Scheme rose to $2.55 billion in June from $2.40 billion in May. Remittances for travel and overseas studies remained a key component of the outflows, with $488.32 million spent on other travel and $96.76 million on studies abroad during the month.

The June data marked a reversal in net FDI flows after May's outflow, even as gross inflows remained broadly steady on a year-on-year basis. End.