FDI inflows down by about 60% in August

The FDI inflows in August 2009 were $3.26 billion. Contrary to smart recovery in the domestic economy and a rebound in exports, overseas investment show a slackening trend in the current fiscal, an official told PTI. For the April-August period of 2010-11, FDI inflows declined by 35 per cent to $8.92 billion compared to $13.8 billion in the same period last year, the official said.

According to experts, weak global economic recovery is one of the reasons for declining FDI in India. “The main reason for the decline in FDI is slump in the major western economies like the US and Europe...,” international trade expert with India’s prestigious Indian Institute of Foreign Trade (IIFT) Rakesh Mohan Joshi said. Crisil chief economist DK Joshi said: “This is not a good news for Indian economy. This reflects that global economic recovery is still fragile and some impact of that would be reflected in our FDI.”

Foreign investment in July 2010 was at $1.78 billion, a dip of 49 per cent and in June international inflows were at $1.38, a dip of 46 per cent over the year ago period. The sectors which attracted foreign investment, included services, telecommunication, construction activities and computer software and hardware, the official said. The country received maximum investment from countries like Mauritius, the US, the UK, Singapore, the Netherlands and Japan.

The government has recently floated discussion papers for public comments to liberalise FDI in multi-brand retail and defence sector. The foreign investment remained low-key despite a recent United Nations Conference on Trade and Development  (UNCTAD) survey showing that India would remain the second most important FDI destination for transnational corporations during 2010-2012, next only to China.

In its latest ‘World Investment Prospects Survey 2010-2012’, the UNCTAD said transnational corporations remain buoyant about investment prospects in China, India and Brazil. FDI for 2009-10 at $25.88 billion was lower by five per cent from $27.33 billion in the previous fiscal.