FDI declines 41% to $1.8 bn in April

The decline reflects slowdown in the economy and erosion of investor confidence

Reflecting slowdown in the economy and erosion of investor confidence, foreign direct investment (FDI) in India has declined by 41% to $1.85 billion in April.

The country had attracted FDI worth $3.12 billion in April, 2011.

Attributing the decline to global and domestic economic problems, the experts have suggested that the government should push some big-ticket reform initiatives to restore confidence of global investors.

"The government should take important and key reforms immediately like allowing FDI in multi-brand retail and permitting foreign airlines to buy stake in domestic carriers. These moves would help in increasing FDI inflows in the country," Ficci Secretary General Rajiv Kumar said.    

 

The decline in FDI comes at a time when India's economic growth slipped to 9-year low of 6.5% in 2011-12. The growth in the January-March quarter was merely 5.3%.

More recently, Standard and Poor's and Fitch have lowered India's credit outlook to negative from stable citing reasons such as high inflation and inadequate reforms.

However, in March, the country had received the highest ever monthly inflows of $8.1 billion. Earlier, highest FDI of $5.65 billion was received in June last year.

Cumulative FDI inflows for the fiscal 2011-12 amounted to $36.50 billion.

The sectors which received large FDI inflows in April include services ($449 million), pharmaceuticals ($359 million), construction ($120 million) and power ($68 million), a senior official in the Department of Industrial Policy and Promotion (DIPP) told PTI.

In April 2012, India received highest FDI from Mauritius ($633 million), UK ($366 million), Netherlands ($357 million), Singapore ($146 million) and Cyprus ($69 million), the official added.

The inflows had aggregated to $19.42 billion in 2010-11, down from $25.83 billion in 2009-10.