FDI in services sector has fallen compared to the last year
Foreign direct investment (FDI) in the services sector declined about 22 % year-on-year to USD 738 million during April-June period of the ongoing fiscal. Though the manufacturing and Infrastructure sector are receiving good FDI investments, the services sector needs to pick up.
The services sector, which includes banking, insurance, outsourcing, R&D, courier and technology testing, had received FDI worth USD 945 million during April-June 2013. This figure declined sharply to USD 738 million during April-June 2014. This data was shared by the Department of Industrial Policy and Promotion.
According to an official, the government is taking steps in order to boost FDI inflows in the sector. The finance minister Arun Jaitley had given a lot of emphasis on FDI during the union budget this year. The government has decided to raise FDI limit to 49 % in the insurance sector from the current level of 26 %.
The services sector contributes over 60 % to India’s GDP. In 2012-13, foreign investment in services fell to USD 4.83 billion from USD 5.21 billion in 2011-12. Post the IT-ITES boom in the last 2 decades, the services sector has been generating a lot of jobs for the youth of the nation.
The other sectors which received lower foreign investment during the first quarter of this financial year include automobile, chemicals and pharmaceuticals.
Foreign investments are considered crucial for India, which needs around USD 1 trillion in the next five years to overhaul its infrastructure sector such as ports, airports and highways to boost growth.
Source- The Financial Express
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