The inflow of foreign direct investment (FDI) in India decreased to around 2-year low at 1.05 billion US dollar in November 2012 because of uncertainties of the global economies. Back in November 2011, the FDI was worth 2.53 billion US dollar.
The Department of Industrial Policy and Promotion (DIPP) announced that from April-November period 2012-13, inflows of FDI decreased by around 31 percent to 15.84 billion US dollar from 22.83 billion US dollar in 2011-12.
The reason why inflow of FDI decreased was because of the issues arising in the global economic scenario. Economic slowdown as well as absence of political consensus on FDI-associated issues are the main causes of decline in FDI inflow.
During 2012-2013, the sectors which remained on the positive side of the FDI inflows included services, hotel and tourism, metallurgical, construction and automobile.
In India, maximum FDI inflow came from Mauritius (USD 7.2 billion), Japan (USD 1.56 billion), Singapore (USD 1.5 billion) the Netherlands (USD 1.09 billion) and the UK (USD 615 million).
The FDI declined to a low level earlier in January 2011 when the inflow was recorded to be 1.04 billion dollar.
Foreign direct investments play a very crucial role in India’s economy. India has a requirement of FDI inflow of around 1 trillion US dollar in next 5 years time so that it can refurbish infrastructure sectors like highways, airports and ports. Decrease in the FDI inflow will pressurise the balance of payment of the country, while also impacting the Rupee.