FDI in services sector slumps 23% to $6.7 billion in 2017-18, shows DIPP data

New Delhi: FDI inflows in the services sector declined by about 23 percent to $6.7 billion in 2017-18, according to the Department of Industrial Policy and Promotion (DIPP).

The sector had attracted FDI worth $8.68 billion in 2016-17. The services sector includes finance, banking, insurance, outsourcing, R&D, courier, tech testing and analysis.

As far as overall FDI inflows are concerned, the growth rate recorded a five-year low of 3 percent at $44.85 billion in 2017-18.

US dollar. Reuters image

US dollar. Reuters image

According to Anis Chakravarty, Lead Economist and Partner, Deloitte India, the slowdown in FDI could be because of re-routing of investments to economies like the US which witnessed an increase in interest rates together with a stronger dollar.

"Expectations of further rate hikes by Fed, along with the tariff issues, this year can be expected to result in a further slowdown in foreign inflows.

"The declining growth rate of FDI is more of an exogenous effect and the policymakers will have to continue to focus on macro-economic management," Chakravarty said.

FDI in chemicals sector too registered a marginal decline in growth rate in 2017-18, when it attracted $1.30 billion investments as compared to $1.39 billion in 2016-17.

The services sector contributes over 60 percent to India's GDP.

Foreign Direct Investments (FDIs) are important for India as it would require huge investments in the coming years to overhaul the infrastructure sector to boost growth.

Decline in foreign inflows could put pressure on the country's balance of payments and may also impact the value of the rupee.


Updated Date: Jul 16, 2018 13:37 PM

Also Watch

Social Media Star: India’s top lifestyle bloggers share their trade secrets on the latest episode
  • Friday, July 27, 2018 First Day First Showsha — Reviewing Tom Cruise's Mission: Impossible - Fallout in 10 questions
  • Friday, August 10, 2018 It's a Wrap: Fanney Khan stars Anil Kapoor, Rajkummar Rao, Pihu Sand in conversation with Parul Sharma
  • Wednesday, August 15, 2018 Partition's real cost: Sonam Kalra revisits accounts of separation, loss in a spellbinding performance
  • Monday, August 13, 2018 Asian Games 2018: How Indian women's hockey team moved on from heartbreak at London World Cup

Also See