FDI in services down 3.5% in April-January 2012-13

Foreign direct investment (FDI) inflows into the services sector declined by 3.5 per cent to $4.66  bn during the April-Jan period of last fiscal.

Overall FDI inflows during the April-January period of 2012-13 financial year declined by 39 per cent to $19.10 billion. .

Blaming the global economic situation,  an official from Deptartment of Industrial Policy and Promotion (DIPP) said investors were hesitant to invest in the sector.

During the same period in the previous year, financial and non-financial services sector had attracted worth $4.83 billion in inward investments.

In 2011-12, foreign investment in the services rose to $5.21 billion from $3.29 billion in 2010-11. Service sector contributes over 60 percent to India's GDP.

The break up of the other sectors  that received FDI during April-January 2012-13 include hotel and tourism ($3.19 billion), metallurgy ($1.38 billion), construction ($1.2 billion) and drugs ($1 billion).

India received maximum FDI from Mauritius ($ 8.17 billion), followed by Japan ($1.69 billion), Singapore ($1.82 billion), the Netherlands ($ 1.51 billion) and the UK ($1.04 billion).

Analysts say foreign investments are considered crucial for India, which needs around $1 trillion in the next five years to overhaul its infrastructure sector such as ports, airports and highways to boost growth.

Decline in foreign investments could affect the country's balance of payments (BoP) situation and also impact the rupee, they add.