FDI inflows down 60% in August

Reflecting fragile recovery in the world’s major economies, foreign direct investment into India dipped for the third consecutive month, by about 60 per cent to $1.33 billion, in August.

The FDI inflows in August 2009 were $3.26 billion.

Contrary to smart recovery in the domestic economy and a rebound in exports, overseas investment showed a slackening trend in the current financial year, an official said.

For the April-August period, FDI inflows declined by 35 per cent to $8.92 billion, compared to $13.8 billion in the same period last year, the official said.

According to experts, weak global economic recovery is one of the reasons for declining FDI into India.

“The main reason for the decline in FDI is slump in the major western economies like the US and Europe,” international trade expert with the Indian Institute of Foreign Trade, Rakesh Mohan Joshi, said.

Crisil Principal Economist D K Joshi said: “This is not a good news for the Indian economy. This reflects that global economic recovery is still fragile and some impact of that would be reflected in our FDI.”

Foreign investment in July was at $1.78 billion, a dip of 49 per cent; and in June international inflows were at $1.38, a dip of 46 per cent over the same period a year ago.

The sectors that attracted foreign investment included services, telecommunication, construction activities and computer software and hardware, the official said. India received most of the investment from countries like Mauritius, the US, UK, Singapore, the Netherlands and Japan.

The government recently floated discussion papers for public comments to liberalise FDI in multi-brand retail and the defence sector.