Substantial long-term capital flows aid external position of India

MUMBAI: India received substantial long-term capital flows, including foreign direct investments ( FDI) and external commercial borrowings, along with portfolio investments, in stocks and bonds, which also helped accretion to foreign exchange reserves, the Reserve Bank of India said.

"Robust inflows of portfolio investment, supported by foreign direct investment and external commercial borrowings kept external financing conditions comfortable and helped add to the reserves," RBI Governor Raghuram Rajan said in his second policy statement of this fiscal.

India attracted FDI worth $31 billion in FY14. About $10 billion came in the January-March quarter. Portfolio inflows of around $10 billion also poured in since April. Numbers for both FDI and external commercial borrowings for April and May have not yet been made public.

A rise in FDI flows could help improve the FDI confidence index, which plunged to the seventh spot in 2013 from second in the previous year, according to global consulting firm AT Kearney. Fewer new projects amid a general slowdown forced companies to go slow on overseas borrowings.

But with some projects expected to be cleared in the near future, there could be a pick-up in demand for overseas funds as well.