FDI in Dec up 30.6% to $2bn; Apr-Dec dips by 23%

Snapping two months of declining trend, foreign direct investment (FDI) in India increased 30.69% to $2 billion (about Rs 9,000 crore) in December 2010.

In December 2009, India had attracted FDI worth $1.54 billion (Rs 7,185 crore).

However, during the nine month period (April-December) of the current fiscal, FDI declined 23.14% to $16.03 billion over the year ago period, a source told PTI.

India had received $20.92 billion in FDI during the same period of the previous fiscal, 2009-10.

In view of declining foreign investment inflows, the Reserve Bank of India (RBI) is considering setting-up a panel to find out the reasons for FDI slowdown and suggest ways to encourage it.

According to economists, investors are cautious as the global economic recovery is fragile and uneven, specially in Europe.

"The global economic recovery is not at all strong. Going by the trend, it appears that India will receive less FDI in 2010-11 compared to the previous fiscal," said Crisil's Principal Economist D K Joshi.

He also said that India was not able to attract very large amounts of foreign investments because of procedural delays.

Meanwhile, another economist said that global recovery, although modest, has thrown up more options for investors in other parts of the world.

In 2009-10, India's FDI had declined to $25.88 billion from $27.33 billion in the previous financial year.

FDI inflows in October 2010 dipped by about 40% to $1.4 billion over the year ago period. In November too, it dipped by 7% to $1.6 billion.

The main sectors that attracted FDI include services (financial and non-financial), telecommunications, housing and real estate, construction activities and power, the source said.

Countries including Mauritius, Singapore, US, UK, Netherlands, Japan, Germany and UAE are the major investors in India.