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FDI in services sector dips 14 per cent in first quarter

Introduction of composite cap concept can help in attracting portfolio investments

New Delhi: Country's services sector witnessed around 14 per cent decline in FDI at USD 636 million (Rs 4,036 crore) in the first quarter of the current fiscal. The services sector, which includes banking, insurance, outsourcing, R&D, courier and technology testing had received a foreign direct investment (FDI) of worth USD 738 million (Rs 4,421 crore) during April-June 2014, Department of Industrial Policy and Promotion (DIPP) data showed. The (services) sector contributes about 60 per cent to the India's economic growth. In FY 2013-14, foreign investment in the sector increased to USD 3.25 billion from USD 2.22 billion in the preceding fiscal.

The FDI in the sector may pick up in the coming months as the government has relaxed norms in insurance and other areas, an official said. Introduction of composite cap concept may also help in attracting portfolio investments in the sector. Other sectors that recorded decline in foreign investment during the first three months of this fiscal include construction development, telecommunication, pharmaceuticals and metallurgical industries.

Total FDI in April-June, however, soared 31 per cent year-on-year to USD 9.50 billion on the back of higher investment in computer software and hardware, trading, automobile and power sectors. Foreign investments are considered crucial for India, which needs around USD 1 trillion over five years to overhaul its infrastructure sector such as ports, airports and highways to boost growth.

( Source : PTI )
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