FDI Inflows Record First Decline In Six Years In FY19

Foreign direct investment in India declined for the first time in the last six years in 2018-19, falling by a percent to $44.37 billion.

FDI inflows in telecommunication, construction development, pharmaceuticals and power sectors declined significantly in 2018-19, according to data of the Department for Promotion of Industry and Internal Trade. Last time it was in 2012-13 when foreign inflows had registered a contraction of 36 percent to $22.42 billion.

Since 2012-13, the inflows had been continuously growing and reached a record high of $44.85 billion in 2017-18.

Inflows in telecommunication dropped to $2.67 billion in 2018-19 from $6.21 billion in 2017-18. In construction development it more than halved to $213 million while in pharmaceuticals it fell to $266 million. In the power sector it declined to to $1.1 billion.

Sectors that recorded a growth in FDI includes services, computer software and hardware, trading, and automobile.

Further, Singapore has replaced Mauritius as the top source of foreign investment into India in the last fiscal, accounting for $16.22 billion inflows. India has received $8 billion FDI from Mauritius.

The other major investors in the country includes Japan, the Netherlands, the U.K., the U.S., Germany, Cyprus, the United Arab Emirates and France.

FDI is important as India would require huge investments in the coming years to overhaul its 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.