FDI in services sector dip by 30 pc in Apr-Oct 2010

The financial and non-financial services sector had attracted FDI worth USD 3.12 billion (Rs 15,087 crore) during the same period last fiscal. According to experts, the government should now look at opening sectors like banking and retail to attract more foreign inflows.

"This is not good news (that FDI is declining). Our services sector is attractive but due to lack of banking sector reforms and closure of retail sector for foreign investors, FDI is not taking up," Economist and Ficci's Director General Rajiv Kumar said.

Kumar said the government should make the business environment more investor friendly to attract FDI. However, India still remains a preferred destination for foreign investment and that is evident from the strong foreign institutional investors (FII) inflows.

Overseas funds infused a whopping USD 4.78 billion in November 2010 taking the total to USD 38.5 billion in 11 months of 2010. It is a record inflow in a single calender year. On the other hand, overall FDI inflows dropped by 30 per cent to USD 12.39 billion during April-October 2010-11, against USD 17.6 billion in the year-ago period.

The services sector, despite the 30 per cent dip in FDI, topped the chart in attracting maximum investment. Telecommunications segment, including radio paging and cellular mobile, was the second best sector that attracted USD 1.06 billion, followed by power (USD 729 million), construction (USD 718 million), housing and real estate (USD 716 million) and computer and software (USD 553 million), and during the period, the data said.

During the period, the highest FDI of USD 4.48 billion came from Mauritius followed by Singapore (USD 1.28 billion), the US (USD 908 million), the Netherlands (USD 768 million) and Japan (USD 586 million).

Mauritius accounts for 42 per cent of the country's total FDI during the period under review. The government is making sustained efforts, including involving stakeholders in policy formation, to make the investment regime more attractive and investor friendly.

The government is considering to liberalise FDI regime in sectors like defence and multi-brand retail.

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