FDI in telecom nosedives to $93 mn in Apr-Jan

Global economic slowdown, difficult policy environment main factors driving foreign investors away

Foreign Direct Investment in India's telecom sector has plunged to $93 million in the April-January period on account of global economic slowdown and difficult policy environment within the country.
    
FDI in the telecom sector, which includes radio paging, cellular mobile, basic telephone services, attracted $1.99 billion during April-January period of the 2011-12 fiscal, as per the Department of Industrial Policy and Promotion (DIPP).
  
"Two things have impacted the inflows in the sector - the global economic slowdown and problems at the domestic front," an official said.
    

GSM industry body COAI Director General Rajan S Mathews said that problems related to cancellation of telecom licences last year by the Supreme Court in 2G spectrum allocation case, and unstable policies have impacted FDI inflows in the sector.

    
"There is an urgent need to improve the investment climate for the sector which has become negative. Government has to reduce the cost of spectrum, provide stable policies and regulatory regime to boost investments," Mathews added.
    
Foreign investment in telecom is expected to touch a maximum of $100 million for the entire fiscal ended in March. In 2011-12, 2010-11 and 2009-10, the attracted FDI worth $1.99 billion, $1.66 billion and $2.55 billion respectively.
    
Overall as well, FDI in India declined by about 39% to $19.10 billion during the April-January period of the current fiscal.
    

The decline comes at a time when the economic growth for 2012-13 is estimated to be just 5%, lowest in a decade.
    
Sectors which have received large FDI inflows during the first 10 months of the current fiscal include services ($4.66 billion), hotel and tourism ($3.19 bn), metallurgical ($1.38 bn), construction ($1.20 bn) and Pharmaceuticals ($1 bn).
    
India received maximum FDI from Mauritius ($8.17 billion), followed by Japan ($1.69 bn), Singapore ($1.82 bn), the Netherlands ($1.51 bn) and the UK ($1.04 bn).
    
The inflows had aggregated to $36.50 billion in 2011- 12, as against $19.42 billion in 2010-11 and $25.83 billion in 2009-10.

    
Decline in foreign investments puts pressure on the country's balance of payments (BoP), and could also impact the value of the rupee.