The country?s computer hardware and software industry, which was at the fifth position till last fiscal in terms of foreign direct investment (FDI), has dropped to the eight rank, with a 58.5% drop in FDI in the current financial year. According to figures from the department of industrial policy and promotion (DIPP), FDI flow into the sector stood at Rs 2,763 crore from April to November in 2009-2010 compared to Rs 6,670 crore in the same period in fiscal 2008-09 and Rs 4,217 crore in 2007-08.
The drop in FDI in the sector is the steepest across all major sectors. Overall FDI flows in the country also showed a growth of 9%. According to technology sector analysts, several reasons could have contributed to the fall which includes the slowdown in the overall growth of the industry. According to the IT industry body Nasscom, IT-BPO exports from the country during the current year are expected to grow between 4-7% compared to around 13% growth clocked in the last financial year.
?The slowdown in growth in the sector could have resulted in lesser investment in terms of expansion of existing facilities and setting up of new captives,? said Viral Thakker, executive director, advisory services, KPMG.
Moreover, the fact that could have led to net FDI dropping in the current year is that this year saw sale of several captive units out of the country coupled with global acquisitions by Indian firms. During the period, agricultural services showed the biggest jump as FDI in the sector increased from a meagre Rs 16 crore in the last financial year to Rs 6,327 crore in the present year.
Agricultural services sector was followed by sea transport and electrical equipment sector, which showed the biggest jump in investment.
During April-November 2009-10, total FDI equity inflows stood at Rs 93,354 crore ($19,379 million) against Rs 85,700 crore ($19,791 million) during the corresponding period in 2008-09.