22 June, 2010

FDI in services sector drops 33.5% due to global credit crunch

Foreign direct investment in the services sector dropped by 33.5 per cent to $4.39 billion during 2009-10. However, the services sector, which includes financial and non-financial services, attracted the maximum foreign inflows out of all the sectors, according to the latest data of the Department of Industrial Policy and Promotion (DIPP).

In 2008-09, the country received $6.61 billion FDI in the services sector. "The main reason for the decline in FDI in the services sector in 2009-10 was the global credit squeeze. The financial services sector was the worst hit," CRISIL Principal Economist D K Joshi said.

The UK, the Netherlands, Germany and France are the major investors in India.FDI in computers and the hardware segment also slipped to $919 million from $1.67 billion in 2008-09.The services sector attracted 21 per cent of the total foreign direct investment (FDI) inflows in April-March, 2009-10.It was followed by construction activities, housing and real estate and telecommunications, which attracted $2.86 billion, $2.84 billion and $2.55 billion investments respectively during the previous financial year.

The highest FDI of $10.37 billion came from the Mauritius, followed by Singapore and the US. However, the contribution from Mauritius was less than in 2008-09, when the country received $11.2 billion FDI.

Overall, FDI during the fiscal declined to $25.88 billion from $27.33 billion in 2008-09.