Modi effect: FII surges to $ 5 billion in July

The government’s reform agenda has got a nod of approval from foreign investors as they poured in more than 25 billion USD in the Indian market since January, with a little over $5 billion coming in July alone.

This is a sign that foreign investors are confident about the reform agenda of the new government in New Delhi, say some experts.

India’s cabinet recently gave the approval to raise the equity cap in the insurance sector from 26% to 49%. The move is expected to bring in investments worth over Rs. 25,000 crores (over 4 billion USD).

A surge in investments in recent months has taken the cumulative net investments of foreign investors into India to over $196 billion since 1991. In rupee terms, their investments are at Rs 9.4 lakh crore level.

A slew of initiatives have been undertaken to attract more FDI into India. Market regulator SEBI created a new investor category called Foreign Portfolio Investors at the start of June. FIIs (Foreign Institutional Investors) along with sub-accounts and qualified foreign investors have been placed together in this new investor category.

The government is expected to announce similar raises in equity cap in sectors including defence and railways.

Further, the FII limit for investment in government securities has been hiked by $5 billion, within the total cap of $ 30 billion.

From July 1-25 the net foreign investments in the equity market were USD 2.2 billion, and USD 3 billion in the debt market, taking the total to USD 5.2 billion, as per the latest data.

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