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FDI in services sector grew 36.5% to $9.15 billion in 2018-19: DPIIT

Date: 07 June 2019 Tags: Services

According to the Department for Promotion of Industry and Internal Trade (DPIIT) data, foreign direct investment (FDI) in services sector grew 36.5% to USD 9.15 billion in 2018-19. Services sector includes finance, banking, courier, insurance, outsourcing, R&D, tech testing and analysis. It attracted FDI worth US $6.7 billion in 2017-18.

Key Facts

  • FDI in other sectors: Healthy growth in FDI inflows was recorded in fields of computer software and hardware, trading, automobile industry, and chemicals.
  • However, overall FDI inflows declined for first time in last six years in 2018-19, falling 1% to US $44.37 billion as foreign investments fell significantly in telecommunication and pharmaceutical sectors.
  • FDI in chemicals sector too registered marginal decline in 2017-18 as it attracted US $1.30 billion investments as compared to US $1.39 billion in 2016-17.
  • Significance: Increasing FDI inflows in services sector is vital as it contributes over 60% to the gross domestic product. This sector accounts for about 18% of the total FDI India received between April 2000 and March 2019.
  • Foreign investments are crucial as India needs around US $1 trillion for overhauling its infrastructure sector such as airports, ports and highways to boost growth.
  • Strong inflow of foreign investments will help to improve India's balance of payments (BoP) situation and strengthen value of rupee against global currencies, especially US dollar.
  • Government support: Union government has taken several measures like fixing timeliness for approvals and streamlining procedures to improve ease of doing business in the country and attract foreign investments.
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