Comparison of Fdi Inflows Between Sectors

Topics: Investment, Foreign direct investment, Macroeconomics Pages: 1 (373 words) Published: March 19, 2013
RANK| SECTOR| 2009-10 [in Rs (US$)]| 2010-11 [in Rs (US$)]| 2011-12 [in Rs (US$)]| Cumulative (Apr ’00- Jan ’12) [in Rs (US$)]| %age of total inflows (in US$)| 1| SERVICES| 19,945 (4,176) | 15.053 (3,296)| 22,771 (4,836)| 1,43,878 (31,971)| 20%| 2| TELECOMMUNICATIONS| 12,270 (2,539)| 7,542 (1,665)| 8,984 (1,992)| 57,050 (12,547)| 8%| 3| DRUGS & PHARMACEUTICALS| 1,006 (213)| 961 (209)| 14,482 (3,208)| 42,745 (9,170)| 6%|

FDI Inflow to Service Sector has been phenomenal in the past few years. Since the onset of the liberalization of the Indian economy in 1991, the country has experienced a huge increase in the inflow of Foreign Investments. The service sector in India has tremendous growth potential and as such it has attracted huge Foreign Direct Investments (FDI). However, with respect to the global meltdown the last three years i.e. from 2008-09 to 2010-11, show the decline in the inflow of FDI in India with respect to the service sector, with a steady climb after that for 2012. In the telecommunications sector, the impact of the global meltdown has been felt, rather strongly, along with scenario influences in India. The 2G-3G telecom scam, and lots of negative perceptions about the telecom industry due to this, has resulted in a decrease in the FDI inflow to this sector between 2009 and 2011. After that, however, there has been a slight recovery. In the pharmaceutical sector, after the introduction of greater regulations and relaxation in FDI inflow, there has been a phenomenal increase in the inflow. This is seen as a positive influence on the economy.

This comparison clearly shows that the FDI inflow in the given sectors in on an upswing, and the impact on the economy has been favourable, with a rise in the GDP. Foreign Direct Investment (FDI) as a strategic component of investment is needed by India for its sustained economic growth and development through creation...
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