India's FDI up 259 percent in September
By ERIKA KINETZ,AP Business Writer AP - Thursday, November 6
MUMBAI, India - Foreign direct investment to India surged to $2.56 billion in September, up 259 percent over the same month last year, the Ministry of Commerce said Wednesday.
Even as foreign institutions have pulled money from Indian equities_ $12.5 billion so far this year _ the growth in foreign direct investment shows that global investors still have faith in India's medium-term prospects, said Subir Gokarn, chief Asia-Pacific economist for Standard & Poor's in New Delhi.
"It's a sign that investors who entered projects with two to three year horizon retain their expectations," he said. "It's a very positive sign."
FDI to India has been rising in the last few years, and economists say it is a lagging indicator of investor sentiment because it takes time to deliver funds once a project has been decided upon.
For the April to September period, FDI grew 137 percent, to $17.21 billion. Services, construction, real estate, and computer hardware and software attracted the most investment, the ministry said.
Top investing countries for the period were Mauritius ($5.27 billion), Singapore ($1.72 billion), U.S. ($1.15 billion) and Netherlands ($580 million).
Other economic data also paint a rosier picture of India's economy than the punishing pullout from equities might suggest.
Foreign investors fleeing risk and seeking liquidity to meet redemptions back home have helped drive the nation's benchmark stock index down more than 50 percent this year.
Though the tide started to turn this month, with net foreign institutional investment in India's stock markets of $459 million, the flight of dollars has caused the rupee to depreciate sharply, wreaking havoc with corporate earnings.
In contrast, export data, released by the Ministry of Commerce Monday, still looks "healthy" Gokarn said.
From April to September, exports were 4.05 trillion rupees ($95 billion), a growth of 30.9 percent in dollar terms and 36.7 percent in rupee terms from last year, the ministry said.
Exports during the month of September were valued at 626.41 billion rupees ($13.7 billion), which was 10.4 percent higher in dollar terms and 24.7 percent higher in rupee terms than last year.
In dollar terms, that's the weakest export growth since November 2005, according to Citigroup.
Gokarn said rupee depreciation helped local manufacturers offset slowing sales overseas in rupee terms.
He cautioned, however, that September's retreat in dollar terms suggests that the slowdown in global demand has started to affect India.
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