Foreign investment in services sinks to 60% in April-Dec Quarter
Foreign direct investment (FDI) into the services sector dropped by 60 percent to USD 1.59 billion in the last three quarters of year. This sector includes banking, insurance, outsourcing, R&D, courier and technology testing, it received FDI worth USD 4.04 billion in the April-December period of 2012, and this is according to the data collected by the Department of Industrial Policy and Promotion (DIPP). An industry expert says that the foreign investors are waiting for the next government to come in rule.
Krishan Malhotra, head of the tax division at corporate law firm Amarchand & Mangaldas, says that the out of India, investors are eagerly waiting for elections, to invest in Indian market. They will decide to invest or not to invest after the formation of new government.
The much awaited elections will start from April 7 in nine stages. Due to drop in FDI in services, over all foreign investment in India decreases by 3 percent to USD 22 billion during the three quarter period, whereas the investment of USD 22.78 billion were made in April-December 2012.
The services sector contributes almost 60 percent to India’s GDP. Some other sectors in which investment sinks include construction development, metallurgical industries and hotel and tourism.
In India foreign investment is important to develop infrastructure such as ports, airports and highways, which requires almost USD 1 trillion in the next 5 years. A downfall in foreign investment affects the balance of payment and the value of Indian currency.
Source: The Financial Express
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