FDI Inflows Continued "Unabated" Despite Pandemic: Finance Minister

Despite overseas investors having pulled out a net Rs 1,14,856 crore from the Indian markets in 2021-22 and foreign portfolio investors (FPIs) having sold domestic equities worth Rs 48,261 crore in March 2022 alone, Finance Minister Nirmala Sitharaman on Monday told Parliament that foreign direct investments (FDIs) inflow has remained “unabated”.

To a question by Congress MP Shashi Tharoor on what the government plans to do to reverse the trend of foreign investors pulling out funds, the Finance Minister intervened even as her junior colleague Pankaj Chaudhary was trying to respond, and said that “FPIs and foreign institutional investors (FIIs) are obviously going to be, as it is typical of their very nature, coming in and going out. But what has got to be looked at, with fairness and objectivity, is the inflow of FDIs which has remained unabated. India is the highest receiver of FDIs since before COVID and that continues during COVID”.

Replying to the question in Lok Sabha, the Finance Minister added that “In fact, it (FDI) continues very much significantly during COVID and subsequently also. It is that which indicates if the money which is coming in, is staying invested in this country thereby creating jobs and prospects for us, and not by indicating only the FIIs and FPIs… FIIs and FPIs may come and go but today Indian retail investors have proven that even if they come and go, any shock that may come is now taken care of because of the shock-absorbing capacity the Indian retailer has brought into Indian market. I think we as a House should stand up and appreciate the Indian retailer who has invested a lot of confidence in the stock market today in India”.

Ms Sitharaman said that investments will have to be gauged not just by looking at FIIs and FPIs, which by their very nature look at interest rates that keep moving up and down, but by the steady inflow of FDI in the country.

She added that “FIIs and FPIs can be very tempted by interest rates elsewhere and prospects anywhere else as well”.

Expressing concern over the fact that March was the sixth straight month when FIIs withdrew from positions in the Indian equity market, Mr Tharoor while asking the question, had said that the “worrying” trend may be exacerbated by the US interest rates hike and commodity price hikes, particularly of crude oil.