Business & Finance
India attracts $73 billion in foreign inflows ahead of deposit incentive deadline
A deposit scheme targeting non-resident Indians has bolstered foreign reserves and stabilized the rupee amid equity outflows and rising import costs.
The short version
- India attracted $73 billion in foreign currency inflows over an 11-week period using targeted deposit incentives for non-resident Indians.
- The surge in capital has helped the Reserve Bank of India manage rupee volatility amid sustained offshore equity selling and a growing trade deficit.
- The special incentives are scheduled to expire on August 31, leaving future foreign exchange buffers reliant on global energy prices and capital investment.
Key facts
- India received $73 billion in foreign capital inflows over an 11-week period, with over $65 billion deposited via Foreign Currency Non-Resident (Bank) accounts.[CNBC]
- The Reserve Bank of India launched the deposit incentives in June alongside measures for foreign currency borrowings to shore up external buffers.[CNBC]
- Foreign investors sold $24.5 billion in Indian equities as of August this year, surpassing the total $18.9 billion sold in the previous year.[CNBC]
- India's trade deficit expanded to $49.3 billion between April and July, driven by a nearly 22% increase in energy imports.[CNBC]
- The Indian rupee weakened by 6.5% against the U.S. dollar since the start of the year, trading at 95.7 per dollar on Tuesday.[CNBC]
What remains uncertain
- Projections for total capital raised before the August 31 deadline vary, with Nomura estimating deposit inflows near $80 billion and Jefferies forecasting overall scheme inflows up to $100 billion.[CNBC]
- It remains uncertain how India's balance of payments will hold up once incentives end, as analysts note outcomes will depend on oil price trends and future foreign portfolio and direct investments.[CNBC]