5-Jul-2011 | 15:16 IST | Edited by: Vishal Bagaria

Contrary to the predictions, the supposed downward trend in foreign direct investment inflow seems to have been reversed.

It is a record in the preceding 11 financial years. The FDI equity inflows to India reached $4.664 billion in May, the second highest FDI equity inflow received in any month.

According to an official release by the Commerce wing, the estimate of the total FDI equity inflows for April and May 2011 amounted to $7.785 billion, depicting a rise of around 77% over the $4.392 billion during April and May 2010.

A rise in the volume of recent investments has been indicative of this fact. The proposed tie-up between BP and Reliance, with a likely FDI of over $7 billion, could possibly be the single largest FDI into any emerging market. Similarly, Vodafone's purchase of Essar's stake, at around $5 billion, is also an indicator of continuing investor confidence in India.

The release also said there has been a continuing and sustained effort to make the FDI policy more liberal and investor-friendly, as FDI is set to usher in the multi-brand retail outlets in India.

In order to simplify the FDI policy, it is important it is vital to promote clarity of understanding of foreign investment rules among foreign investors and sectoral regulators and to design a single-policy framework, so as to relieve the regulatory burden for Government.

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Foreign direct investment (FDI) or foreign investment refers to the net inflows of investment to acquire a lasting management interest (10 percent or more of voting stock) in an enterprise operating in an economy other than that of the investor.

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