India’s foreign direct investment (FDI) inflows into the services sector increased by a mere 5 per cent to $3.6 billion during the April-October period of this fiscal, according to the latest data of Industry Ministry.
The financial and non-financial services sector had attracted FDI worth $3.42 billion during the same period last year.
As far as overall FDI inflows are concerned, they declined by about 27 per during the first seven months of the current financial year to $14.78 billion, from $20.29 billion in the year-ago period.
In 2011-12, foreign investment in the services sector, which contributes over 50 per cent in India’s GDP, rose to $5.21 billion from $3.29 billion in 2010-11.
The other sectors which have received high level of FDI during the first seven months of current fiscal include hotel and tourism ($3.11 billion), metallurgy ($1.21 billion), construction ($691 million) and automobile ($743 million).
Country wise, high levels of FDI came during the period from Mauritius ($6.75 billion), Japan ($1.52 billion), Singapore ($1.24 billion) the Netherlands ($1.05 billion) and the UK ($611 million), the Department of Industrial Policy & Promotion (DIPP) data showed.
The government is making sustained efforts, including involving stakeholders in policy formation, to make the investment regime more attractive and investor friendly, it said.
It has already allowed FDI in multi-brand retail sector besides hiking the cap to 100 per cent in the single brand retailing.
Foreign investments are considered crucial for India, which needs around $1 trillion in the next five years to overhaul its infrastructure sector such as ports, airports and highways to boost growth.
Decline in foreign investments could affect the country’s balance of payments (BoP) situation and also impact the rupee.