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FDI declined in the last fiscal

No Comments Sub Category:Realty News Posted On: Jun 11, 2014

According to the data from the Department of Industrial Policy and Promotion, Foreign direct investment (FDI) in the services sector declined by about 54 % year-on-year to $2.22 billion in the last fiscal.

The services sector which includes banking, insurance, outsourcing, R&D, courier and technology testing, had received FDI worth $4.83 billion during 2012-13. As we are aware that the services sector accounts for over 60 % to India’s GDP, this lack of investment in FDI will slow down the growth of the sector. FDI inflows have also declined in sectors including construction development, hotel and tourism.

India needs about $1 trillion in the 5-year Plan period ending March 2017 to restore infrastructure such as ports, airports and highways and boost growth. FDI is crucial for India, however during the UPA regime there was a fierce protest against FDI which had made the investors disinterested.

The new government needs to take measures to attract the foreign investors. The decline in foreign investments could affect the country’s balance of payments and the rupee against the dollar in the international market. To further attract foreign inflows, the government is planning to relax FDI policy in sectors such as defence, railways and construction activities.

Source- Financial Chronicle

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