FDI inflows dip 19% at $1.1 billion in December 2012

Falling for the second straight month, India's foreign direct investment (FDI) inflows declined nearly 19 per cent to $1.10 billion in December 2012 due to global economic uncertainties.

In December 2011, the country had attracted FDI worth $1.35 billion.

For the April-December period of 2012-13, the inflows have declined by about 42 per cent to $16.94 billion, according to the data of the Department of Industrial Policy and Promotion (DIPP).

According to experts, decline in inflows is largely due to uncertainties in the global economy.

An official said liberalisation of the FDI policy in various sectors would help in boosting the inflows in the coming months.

Sectors which received large FDI inflows during the nine months of the current fiscal include services ($4.04 billion), hotel and tourism ($3.15 billion), metallurgical ($1.30 billion), construction ($1.08 billion) and automobile ($803 million).

India received maximum FDI from Mauritius ($7.45 billion), followed by Japan ($1.62 billion), Singapore ($1.63 billion), the Netherlands ($1.33 billion) and the UK ($622 million).

In November 2012, India attracted FDI worth $1.05 billion, which was a two-year low.

The inflows had aggregated to $36.50 billion in 2011- 12 against $19.42 billion in 2010-11 and $25.83 billion in 2009-10.

Foreign investments are important for India, which needs around $1 trillion in the next five years to overhaul its infrastructure sector such as ports, airports and highways to boost growth.

Decline in foreign investments will put pressure on the country's balance of payments and could also impact the value of rupee.