FDI in services sector dips 24% during Apr-Nov

Foreign direct investment in the country's service sector declined by 24 per cent to $2.59 billion (Rs 11.885 crore) during April-November of the current fiscal, according to industry ministry's latest data.

The financial and non-financial services sector had attracted FDI worth $3.43 billion (Rs 16,566 crore) during April-November 2009-10.

According to experts, the global economic recovery is not strong, which is impacting foreign investments in India.

"FDI is showing weakness now. Global economic recovery is still fragile," Crisil's Principal Economist D K Joshi said.

He, however, said that "India still remains a preferred destination for FDI and that is evident from the strong foreign institutional investors (FII) inflows we are seeing".

The concern is only short-term in nature, the future holds bright, Joshi added.

Overseas funds infused a whopping $4.78 billion in November taking the total to $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 27 per cent to $14 billion during the first eight months of this fiscal, against $19.32 billion in the year ago period.

The services sector, despite the 24 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 $1.09 billion, followed by housing and real estate ($999 million), power ($984 million), computer software and hardware ($574 million) and automobile sector ($533 million) during the period, the data said.

During the period, the highest FDI of $5.15 billion came from Mauritius followed by Singapore ($1.36 billion), the US ($926 million), Japan ($917 million) and the Netherlands ($802 million).

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.