FDI inflows into the services sector rose by about 26 per cent to USD 8.68 billion in 2016- 17 with the government taking steps to improve the ease of doing business and attracting foreign investments. The sector, which includes banking, insurance, outsourcing, R&D, courier and technology testing, had received foreign direct investment (FDI) worth USD 6.89 billion in 2015-16, according to data of the Department of Industrial Policy and Promotion (DIPP).
The government has taken several measures such as fixing timeliness for approvals and streamlining procedures to improve ease of doing business in the country and attract foreign investments.
With FDI growth in key sectors like services and telecom, the overall foreign investment inflows in the country too increased by 9 per cent to USD 43.5 billion last fiscal.
Increasing foreign inflows in the services sector assumes significance as it contributes over 60 per cent to India’s GDP.
The sector accounts for about 18 per cent of the total FDI, India has received during April 2000 and March this year. It was followed by key sectors such as computer software & hardware, construction development and telecommunications.
To further boost inflows in the sector, the government is considering relaxation of policy in areas like single brand retail trading, multi-brand retail trading, print media and construction.
The government is also focusing on enhancing services exports.
It is organising global services exhibition besides the commerce and industry ministry is looking at relax norms in areas like higher education to attract foreign players.
Foreign investments are considered crucial for India, which needs around USD 1 trillion for overhauling its infrastructure sector such as ports, airports and highways to boost growth.
A strong inflow of foreign investments helps improve the country’s balance of payments situation and strengthen the rupee value against other global currencies, especially the US dollar.