Indian Foreign Investment Inflows Reach Record Highs

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Oct. 7 – Net FII inflows for 2010 have crossed the magic figure of US$20 billion on Tuesday, even as India’s central bank sounded caution about these unabated flows. The Securities & Exchange Board of India data showed that this year’s flows are already at record levels, beating the US$17.7 billion net inflows recorded in 2007, just before the U.S. subprime-led financial troubles spread across the globe.

The data showed that the bulk of the inflows — US$15.3 billion — came through the secondary market route, while US$5 billion was infused into the country through IPOs, QIPs, rights offers and other equity issuances by Indian companies to foreigners. In the debt segment too net FII inflows crossed the US$10 billion mark on Tuesday, Sebi data showed. This is also a new yearly high figure.

While global investors are lapping up India’s growth story, some institutional dealers are worried about the fact that money from a number of smaller countries are also flowing into India through the FII channel. As a result of this, the Indian rupee is also gaining in strength against the U.S. dollar.