Uncertain economic conditions in the western markets are working to India’s advantage when it comes to foreign direct investment (FDI) inflows into the services sector, which went up by an impressive 62 per cent during April-January last fiscal.
The financial and non-financial services sector had attracted FDI worth $4.83 billion during the 10-months period of 2011-12 as compared to $2.98 billion in the same period of previous year, according to official data.
Experts feel India offers a safe investment destination at a time when there is so much uncertainty in the western markets.
“When the western markets are reeling under economic crisis, foreign investors are looking at Indian markets, as a better and safe destination. The trend also reflects confidence in India’s growth story,” KPMG Executive Director Mr Krishan Malhotra said.
Though the economic growth in India itself has declined in 2011-12 to 6.9 per cent, the economy is still among the best performing in the world. For fiscal 2012-13, the government expects the economy to improve projecting a GDP growth of 7.6 per cent.
The Asian Development Bank (ADB) has also projected a moderate increase in growth rate for India to 7 per cent in the current fiscal.
Despite taxation and policy issues, the country seems to enjoy the investor confidence as is evident from a 53 per cent increase in total FDI inflows to $26.19 billion during the 10-month period.
The sectors that attracted sizeable FDI inflows include drugs and pharmaceutical ($ 3.20 billion), construction ($2.23 billion), telecommunications ($1.99 billion) and power ($1.56 billion).
During the period, the highest FDI of $8.91 billion came from the Mauritius, followed by Singapore ($4.30 billion) and Japan ($2.75 million).