Indian equity markets have garnered strong Foreign Portfolio Investment (FPI) inflows in the financial year (FY) 2020-21. The year recorded a whopping sum of Rs. 2.74 Lakh Crore in FPI investment riding on the back of strong economic recovery and unwavering confidence of foreign investors in the groundwork of Indian economy.
The robust FPI flows have been the direct result of strong economic recovery driven by the strategically-designed stimulus packages. Furthermore, the government and regulators have executed key policy initiatives for enhancing ease of access and investment climate for FPIs lately.
Key Policy Measures for Growth of FPI
A few such impactful policy measures include simplification and rationalisation of the FPI regulatory regime, operationalisation of the online Common Application Form (CAF) for the purpose of registration with SEBI, allotment of PAN and opening of bank and Demat accounts etc.
Another deciding factor has been the increase in aggregate FPI investment limit in Indian companies from 24% to the sectoral cap. This move has given a major boost to the increased weightage of Indian securities in major equity indices and thereby mobilising massive equity inflows (passive and active) into the Indian capital markets.
Optimistic Growth Forecast for FY2021-22
Meanwhile, World Bank, IMF and other global research firms have pegged a very optimistic growth forecast of more than 10% for India in FY 2021-22. In other words, it means that India will continue to be a lucrative market for future investments, Ministry of Finance concluded.