NEW DELHI: Foreign direct investment (FDI) to India’s services sector shot up 77.6 per cent to $7.55 billion during the first nine months of FY17 on the back of government steps to improve ease of doing business. The services sector had received FDI worth $4.25 billion during the April-December period of 2015-16.
The rise in the inflow comes at a time when the government is considering relaxing norms for FDI, to give a push to the fund inflow. The overall foreign inflows in the country increased 22 per cent to $35.84 billion during April-December 2016-17.
The services sector contributes to about 60 per cent of the country’s GDP, accounting for 17 per cent of total foreign investment flows. Banking, insurance, outsourcing, and technology are some of the key sectors that fall under the ambit of the service sector.
The other sectors where inflows have recorded growth during the nine-month period of 2016-17 are telecom, which saw an inflow of $5.54 billion, trading which saw $2 billion, computer software and hardware at $1.81 billion and automobile at $1.45 billion.
Foreign investment is considered crucial for India, which needs around $1 trillion for overhauling its infrastructure sector such as ports, airports and highways to boost growth.
A strong inflow of foreign investments will help improve the country’s balance of payments situation and strengthen the rupee against other global currencies, especially the US dollar.
During the April-September 2016 period, the services sector had attracted FDI equity inflow of $5.29 billion. In the same period, the telecommunications space attracted $2.79 billion, while $1.48 billion went to trading. Total FDI equity inflows for September 2016 had touched $5.15 billion.
The highest quantum of FDI equity inflows during the April-September 2016 period came from Mauritius at $5.85 billion, followed by Singapore at $4.68 billion, Japan at $2.79 billion, and the US at $1.44 billion.