FDI inflows plunge 60% to $1.33 bn in Aug

Foreign direct investment in August dipped by about 60 per cent to $1.33 billion, the lowest in this fiscal, industry department data released today showed.

The FDI inflows in August 2009 were $3.26 billion.

During the first five months of 2010-11, the inflows declined by 35 per cent to $8.88 billion compared to $13.76 billion in the same period last year, the official said.

Contrary to smart recovery in the domestic economy and a rebound in exports, overseas investment in form of equity inflows are on decline since June.

The overseas investment in June was at $1.38 billion, while that in July was $1.78 billion. The FDI in the first two months of this fiscal, April and May was $2.17 billion and $2.21 billion respectively.

Crisil chief economist D K Joshi said India provides good opportunities for growth and the declining trend will not continue.

"FDI inflow has to pick up in long run but given the uncertainties in the global economy it is difficult to predict from when it will improve," Joshi said.

A recent UNCTAD survey projected India as the second most important FDI destination (after China) for transnational corporations during 2010-2012.

As per the data, the sectors which attracted higher inflows were services, telecommunication, construction activities and computer software and hardware.

Mauritius, Singapore, the US and the UK were among the leading sources of FDI.

FDI for 2009-10 at $25.88 billion was lower by five per cent from $27.33 billion in the previous fiscal.