Hospitality sector attracts $3.2 bn FDI in Apr-Feb FY13

The country's hotel and tourism sector has witnessed a sudden spurt in foreign direct investment (FDI) during the last financial year, reflecting increased interest in the country's hospitality industry.

According to the data of the Department of Industrial Policy and Promotion (DIPP), the sector has attracted FDI worth  $3.21 billion during April-February 2012-13.

DIPP is an arm under the Commerce and Industry Ministry which deals with FDI related matters.

The FDI flow in the sector in the last fiscal is significantly higher as compared to the flow of $3.37 billion which the country received during the last 12 years ending March, 2012.

The foreign inflows in the hotel and tourism sector did not figure in the DIPP's list of the top 10 recipients of FDI prior to September, 2012.

Industry experts attributed the sudden spurt in the FDI to factors like improving investment climate in the sector besides increasing opportunities."Now everybody is looking at India. Huge opportunities are there in Indian hotel and tourism sector. FDI climate in the sector has improved a lot in the country," President of Indian Association of Tour Operators (IATO) Subhash Goyal said.

He said that 100 % FDI is allowed in the sector and further opening up of civil aviation sector for foreign airlines has also helped in attracting foreign players.

However, he asked the government to take more steps to boost investment in the sector."There is a need to look at land related problems for the sector besides taxation and human resource related issues," he added.

     
Further, in India, services sector attracted highest FDI. During April-February 2013, the sector received foreign inflows in the order of  $4.74 billion.

During the period, overall FDI has declined 38% to $20.89 billion.

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