FDI inflows in India have touched $4.66 billion (approx Rs 20,970 crore) in May 2011 which is a second highest monthly FDI received in the country since 2000. The positive turnaround has come up after a lull during the first three months of the calendar year. The FDI inflows have started picking up since April 2011 as the foreign investment in the country grew by 43 per cent in April. During April, the country received FDI worth $3.12 billion (approx Rs 14,040 crore). The Service sector attracted the major FDI of $658 million (approx -Rs 2,961 crore) as it rose by 21 per cent in April. In the Construction sector, including roads, FDI was up by seven per cent to $311 million (approx Rs 1,399.5 crore) during the month. Automobile sector received $266 million (approx Rs 1,197 crore), up five per cent, while flows into the Power sector also grew five per cent to $256 million (approx Rs 1,152 crore). For the January-April 2011, FDI flows were down by nine per cent from a year earlier at $7.1 billion (approx Rs 31,950 crore).

While the FDI inflow is on a surge, the FIPB cleared 16 proposals of FDI amounting to Rs 923.55 crore in June 2011. However, the board deferred decisions on 14 applications and rejected seven. A proposal by Goshi India Auto Parts to convert the Suppliers Credit (Machinery Loan) into equity shares to carry out the business of manufacturing and distribution of spare parts was approved. L&T Finance Holdings' proposal for permission for Pre-IPO placement of equity shares with eligible non-resident investors. This is expected to generate an inflow of Rs 400 crore.

The DIPP, a nodal agency for matters related to FDI, has recently initiated steps towards encouraging more foreign investment in the country. The nodal agency in its recently circulated discussion paper has mentioned that sectoral caps below 49 per cent be done away with. This allows any investment with an FDI up to this limit to be considered Indian for all practical purposes. If this proposal is implemented, the extant policy outlined in Press Notes 2, 3 and 4, which reckons downstream investments by specified FDI entities as Indian investment, would come to mean that such entities can even invest in sectors where FDI is barred.In the wake of rising oil prices world over, rising inflation back home, such moves can prove to be a catalyst in enhancing the FDI inflows into the country. The FDI in the country may get a shot in the arm if government opens up the supermarket sector to greater foreign investment.