Do India's FDI inflows make for a promising trend?

The Department of Industrial Policy and Promotion (DIPP) said that Foreign Direct Investment (FDI) inflows into India stood at Rs 22,620 crore ($3.6 billion) in the month of April 2015. This is an increase of 120% and 111% in rupee and dollar terms, respectively, over the same month last year. 

Interestingly, barring January 2015 when the FDI inflows were at $4.48 billion, the numbers in April 2015 are highest since September 2013 when the inflows stood at Rs 26, 351 crore ($4.13 billion). 

The FDI inflows in the current calendar has been to the tune of Rs 84,118 crore ($13.5 billion) as against Rs 57,995 crore ($9.44 billion), during same four months of last calendar year. This is an increase of over 40% in both rupee and dollar terms. 

Though in absolute terms, China's FDI inflows for the first four months of current calendar are still higher than India at $44.5 billion, the latter has surpassed China in the rate of growth of FDI inflows. China's FDI inflows grew at just over 11% in January to April 2015 period as against over 40% in India's case. 

In April alone, China registered an FDI increase of 10.5%, at $9.6 billion against India's FDI inflows growth of over 100%, at $3.6 billion. 

source: tradingeconomics.com

The increase in FDI inflows into India show that foreign investors confidence into the country is returning. 

Finance Minister Arun Jaitley, who is currently in the  US, also said that the government has managed to partially restore India's economic credibility. He said, "I think we have to restore back, partly we have, and over the next one-two years, we have to continue to restore the credibility of the Indian economy. It is only then that investors world over are going to feel comfortable. The initial signs are good but I think this is momentum which has to be sustained over a period of time," he said.

The reforms agenda, the FDI sector at least, seems to be working with the government liberalising FDI norms especially in the insurance  sector.