With economic recovery in the rich countries remaining fragile, FDI inflows to India dipped for the second consecutive month, falling by about 7 per cent to $ 1.6 billion in November 2010 over the same period last year.
In November 2009, FDI stood at $ 1.72 billion.
During the first eight months of 2010-11, India received Foreign Direct Investment (FDI) inflows worth $ 14.02 billion, a decline of 27.4 per cent over the corresponding period of previous year, an official told PTI.
During April-November 2009-10, the foreign inflows stood at $ 19.32 billion.
The inflows remained low despite a recent World Bank study stating the FDI flows into developing countries, including India, is expected to recover over the next couple of years.
“The sluggish and fragile financial recovery in western countries like the U.S. and Europe could be one of the reasons for slowdown in FDI in India, the official said.
CRISIL’s principal economist D. K. Joshi said FDI inflows are “lumpy in nature” and they keep fluctuating on monthly basis.
After rising in September 2010, FDI inflows in October 2010 dipped by about 40 per cent to $ 1.4 billion from $ 2.3 billion in the same period last year.
The inflows in September 2010 was up by 40 per cent from the same month last year.
However, the government is making efforts to attract more and more FDI into the country.
It is considering liberalising FDI in defence and multi-brand retail sector.
The main sectors which attracted foreign direct investment includes services (financial and non-financial), telecommunication, housing and real estate, construction activities and power.
Countries including Mauritius, Singapore, the U.S., U.K., Netherlands, Japan, Germany and UAE are the major investors in India.
FDI for 2009-10 at $ 25.88 billion was also lower by five per cent from $ 27.33 billion in the previous fiscal.