The Foreign Direct Investment (FDI) in service sector, which contributes over 50% in India's GDP, increased by 55% to $910 million during April-May 2011. During the corresponding period of the last financial year, the finance and non financial sector had attracted around $587 million worth FDI.
This rise in FDI is due to uncertainty in global economic condition as investors see opportunities in emerging Indian market. Currently, United States and European nations are reeling under debt crisis. During the first two months of current fiscal, the overall FDI inflow has increased by 77% to $7.78 billion as compared to $4.39 billion in the same period of last fiscal.
Earlier, the Commerce and Industry Ministry, Anand, Sharma, had mentioned that the recent trend of dip in FDI inflows likely to be reversed in the current financial year. However, in previous fiscal, service sector had registered decline in the FDI inflow, it had fell by almost $1.1 billion to $3.29 billion from $4.39 billion in 2009-10.
Although, the increase in FDI in service sector appears impressive, the drugs and pharmaceutical segment topped the chart in attracting maximum investment of around $2.94 billion during April to May 2011. The aforesaid sector was followed by the Power sector which attracted around $582 million investment.
The automobile was the fourth best sector to attract FDI, it received around $412 million, and the construction followed it by attracting FDI worth $252 million and housing and real estate received FDI worth $249 million.
According to official data, the highest FDI came from United Kingdom ($2.46 billion), Mauritius ($2 billion), Singapore ($1.35 billion) and Japan ($367 million).
Indian government is taking efforts on all fronts to increase the FDI in country. It had involved stakeholders in the policy formation in order to make investment regime more attractive and investor friendly. Government is also considering to liberalizing FDI regime for sectors such as multi-brand retail and defence.
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