Foreign fund investment in Indian capital market grew four-fold to over Rs 1.63 lakh crore in 2012, with the financial services and software sectors cornering bigger pie, Parliament was informed on Tuesday.
Foreign Institutional Investors (FIIs) invested Rs 1,63,350 crore in equity and debts combined last year, as against Rs 39,353 crore in fused in 2011, finance minister P Chidambaram said in a written reply to the Rajya Sabha.
FII investment 2010 was over Rs 1.79 lakh crore. “Government has been making concerted efforts to attract greater foreign investment into India with special thrust on availability of off-shore funds for infrastructure development,” Chidambaram said.
During 2012, FII inflow stood at over Rs 1.27 lakh crore in equities, against an outflow of Rs 2,714 crore in 2011. As for debt, they infused Rs 34,989 crore in 2012, less than Rs 42,067 crore in 2011.
The FII investment in 2012 was the largest in financial services sector at Rs 48,516 crore, followed by software and services sector at Rs 15,045 crore. The investment in pharmaceutical industry was Rs 7,556 crore, food and beverages — Rs 6,161 crore and automobile — Rs 5,319 crore last year. Investment in realty sector was Rs 196 crore.
The government has been taking a host of steps to increase foreign fund inflow in the capital market including enhancing limit for investment in corporate bond to $25 billion, from $5 billion.
Infrastructure debt funds (IDFs) have also been set up to accelerate and enhance the flow of long term debt in infra projects. Also withholding tax on interest payments on borrowings by IDFs was reduced to 5 per cent from 20 per cent.