Is it true that year 2020-21 has been the best year for foreign flows, despite COVID?

Yes, you are right. In fact, it has been a rollicking FY21 for India in terms of foreign flows. Her I am talking about foreign flows at multiple levels including foreign portfolio flows or FPI flows, foreign direct investments or FDI flows as well as select PE flows. FPIs pumped in $36 billion into equities despite a chunk of the year being lost to the ill-effects of COVID-19.

That is just the foreign portfolio flows. In addition, net FDI inflows, which are more long term in nature, also jumped to $44 billion, till January, with two more months data yet to be received. The month of Dec-20 alone accounted for $6.3 billion of FDI flows. During the fiscal year 2020-21, the foreign portfolio investors or FPIs were net buyers in the equity segment but there were almost consistent net sellers in the debt segment.

While most of the FDI flows came from the Reliance for Reliance Jio with Google and Facebook, there have been other major FDI transactions too. On the FPI flows front, what is more encouraging is that the higher flows have been led by the Category-I FPIs. Typically, the Cateogry-1 FPIs comprise central banks, sovereign wealth funds, pension funds and multilateral organisations like the ADB.

If you just look at the month of Mar-21, FPIs have infused Rs.8,642 crore into Indian equities till date. During the year, the FPI flows into India were driven largely by passive flows as global benchmark indices got rejigged, including the MSCI Emerging Markets Index and the FTSE index. India also saw smart 60% growth in Fintech investments in FY21.