FDI in services sector jumps to $5.28 bn during first half of FY17

Sector, had received FDI worth $1.46 billion during April-September 2015

With government taking steps to improve the ease of doing business and attracting foreign investments, foreign direct investment (FDI) inflows into the services sector jumped by over two and a half times to $5.28 billion in the April-September period of the current financial year (FY).

The sector, which includes banking, insurance, outsourcing, R&D, courier and technology testing, had received FDI worth $1.46 billion during April-September 2015, according to the Department of Industrial Policy and Promotion (DIPP).

The government has taken several measures such as fixing timeliness for approvals and streamlining procedures to improve ease of doing business in the country and to attract domestic and foreign investments.

With growth in FDI in important sector like services, overall foreign inflows in the country rose by 30% to $21.62 billion during the first half of FY 2016-17.

The services sector contributes over 60% to India's gross domestic product. In FY 2015-16, foreign investment in services had increased to $6.89 billion from $4.44 billion in FY 2014- 15.

FDI in the sector accounts for 18% of the country's total foreign investment inflows.

The government is focusing on enhancing services exports. It is organising global services exhibition besides the commerce ministry has worked out a proposal to relax norms in the sector, including higher education to attract foreign players.

The other sectors where inflows have recorded growth are: telecom ($2.78 billion), trading ($1.48 billion), computer hardware and software ($1.03 billion) and automobile ($729 million) during April-September of the FY 2016-17.

Foreign investments are considered crucial for India, which needs around $1 trillion for overhauling its infrastructure sector such as ports, airports and highways to boost growth.

A strong inflow of foreign investments will help improve the country's balance of payments situation and strengthen the rupee value against other global currencies, especially the US dollar.