India received a total of US$69 Billion in remittances from NRIs and other overseas Indians in 2012 making India the leading recepient of remittances from overseas. This covered almost 40% of the merchandise trade deficit in 2012. During the April-February period of 2012-13, FDI into India declined 38% to $20.89 billion as compared to $33.49 billion during the same period of the previous fiscal year. Sectors which received large FDI inflows during the 11 months of 2012-13 include services ($4.74 billion), hotel and tourism ($3.21 billion), metallurgical ($1.39 billion), construction ($1.26 billion) and Pharmaceuticals ($1.11 billion). India received maximum FDI from Mauritius ($8.97 billion), followed by Japan ($2.11 billion), Singapore ($1.98 billion), the Netherlands ($1.67 billion) and the UK ($1.06 billion). These figures paint a completely different picture of the Indian economy and where it is headed. Thank God for the migrant remittances, it is essentially helping reduce the Indian current account deficit (CAD).
Also, the fact that Mauritius is the leading FDI investor into India (which is essentially laundered money moving out of India and back into India through the Mauritius channel) tells us that the media hype we usually hear about all the FDI interest in India is essentially bogus. The falling FDI rate into India tells us that investor confidence in India still remains very low. Thus, it is essentially the migrant remittances that is keeping the Indian rupee afloat. If one day the migrant remittances start falling, India's CAD will balloon beyond repair and send the rupee into a free fall. For the next few months leading to Indian general election scheduled for 2014 very strong caution is advised.
