Home Business Strong season of FDI continues, service sector inflows jump by 2.5 times: Report

Strong season of FDI continues, service sector inflows jump by 2.5 times: Report

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Government’s continuous efforts in attracting foreign investments have led to a strong season of inflows in the April-September period of the current fiscal year. Foreign direct investments (FDI) have increased by 2.5 times to approximately USD 5.28 billion indicating bright future and improved confidence by foreign investors in Indian businesses.

Service sector which primarily includes banking, insurance, outsourcing, R&D, courier and technology testing received foreign direct investments (FDI) worth USD 5.28 billion compared to 1.5 billion during April – September period of last fiscal year. The services sector contributes over 60% to India’s GDP. Many other sectors also recorded strong growth in foreign inflows, these sectors are:  telecom (USD 2.8 billion), trading (USD 1.5 billion), computer hardware and software (USD 1.0 billion) and automobile (USD 0.7 billion) during April-September 2016-17, as per Department of Industrial Policy and Promotion (DIPP).

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This strong inflow has contributed strongly in improving India balance of payment and will also strengthen the rupee value against global currencies. It is worth noting that with Donald Trump winning the U.S. election; many are expecting dollar outflows from emerging nations such India. Foreign investments are highly required for India, as it needs around USD 1 trillion for overhauling its infrastructure sector (to build ports, airports and highways to boost growth).

Modi government has taken various steps to attract foreign investments such as fixing project approval guidelines, improving ease of business, amendments in company laws, solvency act etc., and these steps have led to a continues increase in the foreign inflows in India. The government is also focusing on enhancing services exports and proposing Make in India as the lucrative option for foreign businesses. It is organizing global services exhibition to showcase India’s capabilities in businesses. The commerce ministry has also proposed norms relaxation in the export sector, including higher education to attract foreign players.

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