Excluding investments in Reliance Jio, FDI in Indian telecom sector now at all-time low | Economic Times

NEW DELHI: Investments in Mukesh Ambani’s Jio Platforms catapulted the flow of foreign direct investment (FDI) in India’s telecommunication sector in the first two quarters of this fiscal to an all-time high of $16.7 billion from an all-time low of $7 million if the Jio deals were excluded, latest government data and an ET analysis showed.But excluding Jio, FDI in telecom has fallen to $7 million in the April-September period as against a massive $4.3 billion in the same period last fiscal.Excluding Jio, the telecom sector reported the least FDI among all the sectors, worse than hotel and tourism, DPIIT data showed. As a result, the telecom sector’s share in cumulative FDI received over the past two decades has fallen from 8% to 7%, though it continues to be the third largest receiver of foreign inflows.“The sharp fall in FDI in telecom sector from $4.2 billion in H1 FY20 to mere $7 million in H1 FY21 can be ascribed to inherent stress, high regulation along with intense competition in the sector,” CARE Ratings said in a report.But with the $20.6 billion investment in Jio Platforms ($16 billion received in H1), total FDI in telecom is at all time high with Jio’s fundraise alone accounting for half of total FDI received by telecom in the past two decades, data showed.“The investment in Jio Platforms has not been recognised as a pure-play telecom FDI in the data posted by the DPIIT (Department for Promotion of Industry and Internal Trade) and so it only $7 million,” Madan Sabnavis, chief economist at CARE Ratings told ET.In H1 FY21, India's total equity inflows amounted to $30 billion, which was the highest in the comparable periods in the past five years. Equity inflow is the main component accounting for 75% of total FDI inflows in the country, the ratings firm had said in a report.“With another $6.4 billion coming into Reliance Retail, which will be recognised in the second half of FY21, and the bullish sentiment of foreign investors in Indian stocks, I believe India is set to report its highest ever equity inflows, crossing last fiscal’s $50 billion,” another economist said.Digital company Jio Platforms, which also houses telecom business Jio Infocomm and e-commerce venture JioMart, is the 67% controlled subsidiary of Mukesh Ambani’s Reliance Industries. It has raised $20.6 billion from 13 investors in 12 weeks including America’s tech giants Facebook and Google.Another subsidiary, Reliance Retail, has also raised $6.4 billion from nine investors by offloading 10.9% equity to private equity and sovereign funds.