Foreign direct investment (FDI) into Indian services sector declined by 36.5 percent to $1.02 billion during the April-July, 2013 as against $1.64 billion received in same period last year. In FY13, foreign investment in services fell by 7.29 percent to $4.83 billion from $5.21 billion in FY12.
The services sector, which includes banking, insurance, outsourcing, courier and technology testing represent around 60 percent share in Indian GDP. The declined FDI in the sector was mainly due to the factors like lack of financial reforms, restrictions on outsourcing to India by developed economies, inconsistencies in policies and political uncertainties, impacting sentiments of foreign investors. However, country’s overall FDI has grown by 20 percent to $7.05 billion during the April-July, 2013 from $5.90 in the corresponding period of last year.
Meanwhile, the government has taken several policy decisions to attract foreign investments including allowing FDI in multi-brand retail, telecoms and civil aviation sectors. Presently, the government is also considering raising the FDI cap in the insurance sector to 49 per cent from 26 per cent. Meanwhile, India would require around $1 trillion in the 12th five year plan (2012-2017), to overhaul its infrastructure sector such as ports, airports and highways to boost growth. Further, a rise in FDI will help support the rupee, which recently depreciated to record low of over 68.50 against the US dollar.
The services sector, which includes banking, insurance, outsourcing, courier and technology testing represent around 60 percent share in Indian GDP. The declined FDI in the sector was mainly due to the factors like lack of financial reforms, restrictions on outsourcing to India by developed economies, inconsistencies in policies and political uncertainties, impacting sentiments of foreign investors. However, country’s overall FDI has grown by 20 percent to $7.05 billion during the April-July, 2013 from $5.90 in the corresponding period of last year.
Meanwhile, the government has taken several policy decisions to attract foreign investments including allowing FDI in multi-brand retail, telecoms and civil aviation sectors. Presently, the government is also considering raising the FDI cap in the insurance sector to 49 per cent from 26 per cent. Meanwhile, India would require around $1 trillion in the 12th five year plan (2012-2017), to overhaul its infrastructure sector such as ports, airports and highways to boost growth. Further, a rise in FDI will help support the rupee, which recently depreciated to record low of over 68.50 against the US dollar.
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