India’s foreign direct investment (FDI) declined by over 50% to $1.16 billion in October for the second month in a row, reflecting economic slowdown in the world's major economies. India received $2.33 billion overseas investment in the same month last year. In September, the inflows were at $1.76 billion, down by 16.5% year-on-year.
However, in April-October 2011, the FDI rose 50.3% to $20.8 billion, from $13.84 billion in the year-ago period as inflows were healthy in the initial months. Though in August FDI inflows had increased over two-fold to $2.83 billion, year-on-year, in July they declined after a significant jump for two consecutive months - May and June.
Uncertain economic conditions in the US and Europe are one of the major reasons for the declining FDI in India. However, despite uncertainties in the global economy, FDI is likely to touch $35 billion in 2011-12, as against $19.4 billion in the last fiscal on account of major deals like RIL-BP and Posco.
Mauritius, Singapore, the US, the UK, the Netherlands, Japan, Germany and the UAE are major sources of FDI for India. In April-October 2011, the sectors that engrossed the maximum FDI include services, construction activities, power, computers and hardware, telecom and housing and real estate.
In order to attract more inflows by easing FDI procedures, the Reserve Bank of India said that transfer of shares between Indians and non-residents will not require its permission in several key areas like financial services.
During 2010-11, equity inflows through the FDI route had declined 25% to $19.43 billion, from $25.6 billion in 2009-10 compared to $27.3 billion in 2008-09.
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