In a sign of worry, foreign direct investment (FDI) in the services sector, which accounts for over 60 per cent to India's GDP, declined by about 61 per cent year-on-year to $1.8 billion during April-January. The services sector, which includes banking, insurance, outsourcing, R&D, courier and technology testing, had received FDI worth $4.66 billion during April-January 2013. Overall foreign inflows into the country dipped to $18.79 billion during the first 10 months of 2013-14 from $19.10 billion in April-January 2013.
FDI in services sector off lately has been on declining trajectory. In 2012-13, foreign investment in services fell to $4.83 billion from $5.21 billion in 2011-12. FDI inflows have also declined in sectors including construction development and hotel and tourism.
Dwindling FDI is a sign of dwindling confidence, however the same is expected to pick once momentum after the formation of the new government, which is expected in May. FDI is considered to be crucial for India, which needs about $1 trillion in the five years ending March 2017 to refurbish infrastructure such as ports, airports and highways and boost growth.
