Foreign Direct Investment (FDI) in services sector, which includes banking, insurance, outsourcing, R&D, courier and technology testing, has dipped 15% to $488 million during April-May 2015 as compared to $574 miilion during same period of last year, as per latest data released by Department of Industrial Policy and Promotion (DIPP). Services sector contributes over 60% to the India’s Gross Domestic Product. Sectors including construction development, telecommunication and pharmaceuticals recorded decline in FDI during the same period.
FDI in services sector is expected to increase in future as government has relaxed FDI norms in insurance sector and has also focused to improve ease of doing business in India. Also the introduction of composite cap would attract more investors to the sectors. During 2013-14, FDI in the sector increased to $3.25 billion from $2.22 billion in 2012-13.
In the same period (April- May) of current financial year, the total FDI soared 40% to $7.45 billion Year-On-Year due to higher investment in trading, automobile and power sectors. Foreign investments which are considered crucial for the country needs around $1 trillion over five years to overhaul its infrastructure sector such as ports, airports and highways in order to boost growth.