Coronavirus and a fear of community spread of the pandemic have taken a toll on India’s investment climate, with foreign portfolio investors continuing to pull out money from India. After a lifetime high FPI withdrawal in the month of March, the foreign portfolio investors have once again pulled out nearly Rs 15,000 crore from the country’s capital market in April, according to the National Securities and Depository Limited (NSDL). The net FPI withdrawal was to the tune of Rs 1,18,203 crore in March 2020, whereas the country received FPI worth Rs 16,728 crore in April 2019. The rough phase of India’s FPI sector has continued for the last two years when the country has been an unprecedented net seller.
Even as the country received handsome FPI in the months prior to March, the heavy FPI outflow in March had offset the previous investments. In the full year 2018, Rs 80,000 crores were pulled out from the Indian market, while in only one month of March 2020, more than Rs 1.2 lakh crore had been taken away by the FPI investors. Before this, the foreign investors pulled out their investment from the Indian market when there were speculations on the imposition of super-rich tax after the last fiscal’s full budget.
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Meanwhile, to get hold of the situation, the government is making regular efforts to stop the plight of foreign investors and to create a suitable environment in the country to attract them to return to the Indian markets. Prime Minister Narendra Modi yesterday held a high-level meeting with FM Sitharaman, Commerce Minister Piyush Goyal, and others to look into the problems of foreign investors and help them in getting all the necessary central and state clearances in a time-bound manner. He also said that the action should be taken for a more proactive approach to attract the investors, according to a statement by the Prime Minister Office.