Even as global recovery continues to be fragile, foreign direct investment (FDI) inflows into India stood at just $15.97 billion during the January-September period, down 26 per cent as compared to the same period last year. According to the official data of Department of Industrial Policy and Promotion (DIPP), in January-September, 2009, the country attracted FDI worth $21.44 billion. The countries that pumped the maximum foreign capital into the Indian economy during the nine-month period were Mauritius, Singapore, the U.S., the Netherlands, Cyprus, Japan, Germany and France.

The sectors that attracted the maximum foreign inflows include services (financial and non-financial), computer software and hardware, telecommunications, housing, real estate, power and automobiles.

According to the data released by the Reserve Bank of India (RBI) in its latest bulletin, FDI flows shrunk by over 23 per cent during the first-half of the current financial year to $13.50 billion from $17.55 billion a year ago. However, the pace of decline has come down during September when inflows increased by over 40 per cent mainly due to acquisition of shares in Indian companies worth $1.5 billion getting completed.

In fact, it was for the first time in four months that there was an increase in FDI inflows during a month. On a net basis, the deficit would be even higher given that Indian companies are back to buying stakes in foreign companies.

In contrast to FDI, FII (foreign institutional investment) inflows have surged due to better returns that are on offer in emerging markets such as India. During the first-half of the financial year, FII's had invested $22.3 billion in Indian stocks and bonds as compared to $15.27 billion during April-September 2009, an increase of over 46 per cent.

Keywords: FDIFIIRBI

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