New Delhi: India is expected to see net FDI inflows of USD 35 billion this financial year, which may fall short of the figure for 2015-16, says a Citigroup report.


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According to the global financial services major, FDI inflows are inching up, but the pace of increase this fiscal might as well come up short in comparison to 2015-16.


The upside potential will be substantial in the medium term, the report said, adding that gross FDI flows of USD 8.9 billion in June-July partially allays fears of a slowing trend in April-May.


Even after the surge in June-July, the gross FDI inflow so far this fiscal is 5 percent lower than same period last year and the net tally is down 29 percent, the report said.


"Given recent trends in FDI inflows, it is unlikely that a similar growth rate in inflows can be attained for 2016-17, but we remain hopeful that the improved trend in June-July will push net FDI inflows close to our forecast of USD 35 billion for 2016-17 (USD 36 billion in 2015-16)," Citigroup said.


The report noted that FDI surge to India might have been buoyed by improved sentiment towards emerging markets in a post-Brexit world which incidentally is also reflected in stronger portfolio flows of around USD 3.5 billion and rupee appreciation of 1 percent in June-July.


"India has received only 2.2 percent share of global FDI inflows during 2011-15. This indicates the upside potential of FDI inflows as the cyclical recovery strengthens and structural bottlenecks are addressed over the medium term," Citigroup said in a research note.