FDI in services sector up 46% in 2014-15

By: |
New Delhi | June 14, 2015 12:27 PM

With the government taking steps to improve ease of doing business and attracting investments, FDI inflows into the services sector grew by over 46 per cent to USD 3.25 billion in 2014-15.

fdi in service sectorTo attract investment in the services sector, the government has raised the FDI cap in insurance sector to 49 per cent from 26 per cent. (Reuters)

With the government taking steps to improve ease of doing business and attracting investments, FDI inflows into the services sector grew by over 46 per cent to USD 3.25 billion in 2014-15.

The services sector, which includes banking, insurance, outsourcing, R&D, courier and technology testing, had received foreign direct investment (FDI) worth USD 2.22 billion in 2013-14.

However, the total foreign inflow in 2014-15 in the services sector was low as compared to 2012-13 when it was USD 4.83 billion, according to the Department of Industrial Policy and Promotion (DIPP) data.

The government has announced a series of steps such as fixing timeliness for approvals to improve the ease of doing business in the country and attracting domestic as well as foreign investments.

In step with the growth in FDI in important sectors like services, overall foreign inflows in the country too rose by 27 per cent to USD 30.93 billion during the previous fiscal. The amount was USD 24.29 billion in 2013-14.

Services contribute about 60 per cent to India’s GDP and it receives high foreign inflows in this sector.

The other sectors where inflows have recorded growth telecommunications (USD 2.89 billion), automobiles (USD 2.57 billion) and computer software and hardware (USD 2.20 billion).

To attract investment in the services sector, the government has raised the FDI cap in insurance sector to 49 per cent from 26 per cent. The policy was also relaxed in other sectors such as defence, railways and medical devices.

Foreign investments are considered crucial for India, which needs around USD 1 trillion in the next five years to overhaul its infrastructure sector such as ports, airports and highways to boost growth.

Growth in foreign investments helps improve the country’s balance of payments (BoP) situation and strengthen the rupee.

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