Foreign direct investment (FDI) in India declined by about 20 per cent to $ 2.26 billion in August compared to same month in the previous year, after registering increase in the inflows in the previous month.

In August 2011, the country had received foreign investment worth $ 2.83 billion.

The foreign inflows were up by about 60 per cent in July. During April-August 2012 the FDI inflows dipped by 60 per cent to $ 8.16 billion from $ 20.63 billion in the same period last year, an official in the Department of Industrial Policy and Promotion (DIPP) said.

When asked about the reason for decline in the FDI, the official said that these numbers are fluctuating in nature.

However, he said decisions like allowing FDI in multi-brand retail and civil aviation would help in boosting investments in the country in the coming months.

Industry experts say foreign investments are important for India, which needs to fund over $ 1 trillion over the next five years to overhaul its infrastructure sector like ports, airports and highways key to boost growth.

Decline in foreign investments puts pressure on the country’s balance of payments (BoP) and could also impact the rupee.

Sectors which received large FDI inflows in the month under review include services ($ 2.28 billion), automobile ($ 617 million), construction ($ 601 million) and metallurgical ($ 595 million).

India received maximum FDI from Mauritius ($ 2.53 billion), Japan ($ 1.16 billion), the Netherlands ($ 923 million), the UK ($ 570 million) and Singapore ($ 961 million).

The inflows had aggregated to $ 36.50 billion in 2011-12 against $ 19.42 billion in 2010-11 and $ 25.83 billion in 2009-10.

Foreign inflows in April, May and June dipped to $ 1.85 billion, $ 1.32 billion and $ 1.24 billion compared to $ 3.12 billion, $ 4.66 billion and $ 5.65 billion, respectively in the year-ago period.

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