'India still 2nd best FDI spot, recent dip temporary'

Nomura India has said despite the recent massive slump in FDI inflows, India remains the hottest investment destination in the world after China and inflows will return to the pre-crisis peak levels by early 2012.

Foreign direct investment (FDI) inflows plunged 25% in April-January period to $17 billion year-on-year.

The figure was more alarming in January when it nosedived 48% to $1.04 billion.

Attributing the recent decline to primarily global factors, Nomura India Vice-President and economist Sonal Varma said following the 2008 crisis, other emerging markets too saw sharp drop in FDI inflows but picked up steam after two years unlike India.

"Of the $12-billion decline in FDI inflows between 2008 and 2010, around 60% was due to weak inflows into service spaces like computer software and hardware, financial services, banking, and construction," Varma said.