Foreign Direct Investment (FDI) in the country declined by over 65 percent to $4.64 billion during April-June 2012-13 year-on-year amid global economic slowdown.
The FDI inflows were $13.4 billion in April-June 2011-12 period. According to latest data of the Reserve Bank of India (RBI), the FDI inflow in the country was $1.32 billion in June as against $5.73 billion in the same month last year.
The data revealed that the net FDI—difference between FDI inflow and outflow—plunged 58 percent to $3.83 billion in the first three months of the fiscal. The net FDI inflow was $9.04 billion in the same period of 2011-12.
The inflows have been on decline since the beginning of the fiscal amid global economic slowdown and some foreign investors expressing concerns over India's "policy inaction". Director of Indian Institute of Foreign Trade (IIFT) K T Chacko said "may be it (decline in FDI) is because of the general lack in the overall investment climate and lack of stability in the policy".
He said the amendments to tax laws with retrospective effect, too, could have some impact on the foreign fund inflows. Industry bodies have been demanding from the government to go ahead with economic reforms like opening the multi-brand retail sector to foreign investors to boost the investment climate in the country.
Decline in foreign investments puts pressure on the country's balance of payments (BoP) and could also impact the rupee.