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India gets high on FDI

April 15, 2008

The Indian Economy may be showing signs of slowing down but foreign investors still seem to be sold on the country’s growth story. Foreign direct investment (FDI) inflows in February 2008 stood at $5.67 billion (Rs 22,680 crore), a massive increase of 712 per cent over the corresponding month last year.

 The country received FDI worth $20.13 billion (Rs 83,320 crore) during April-February 2007-08, an increase of 70 per cent over the figure of $11.88 billion (Rs 47,520 crore) in the corresponding period of 2006-07. This is the highest FDI flow into the country during any year. Says D.K. Joshi, Principal Economist, Crisil: “It’s a reflection of the confidence that foreign investors have in the India growth story.”

The top five sectors attracting FDI (during April 2000 to December 2007) are services, computer software & hardware, telecommunications, construction and automobile.

Mauritius is the top source of FDI, accounting for 45 per cent of the total inflows ($20.1 billion), the US is next with over 9 per cent ($4 billion) and the UK follows, with about 8 per cent ($3.4 billion). Says Joshi: “Going forward, I expect more inflows into infrastructure where the opportunities are huge. The retail sector is also expected to emerge as another focus area if the government opens it up.”

Rishi Joshi

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