FDI fell 30 per cent year-on-year in February to $1.2 billion, making a strong case for the government to fine-tune foreign investment norms in its policy review this week.
Analysts said the government needed to come out with measures to boost foreign direct investment (FDI). A persistent decline in FDI will keep the balance of payment under pressure and can put downward pressures on the rupee, they said.
“The numbers are bad … the government needs to take the matter seriously and initiate steps to boost investors’ confidence,” officials said.
During the 11-month period from April 2010 to February 2011, FDI inflows declined 25 per cent to $18.3 billion.
In January, FDI plunged 48 per cent compared with the corresponding month of the previous year to $1.04 billion.
In February last year, India had attracted foreign direct investment of $1.7 billion. The country received FDI worth $24.6 billion during the April-February 2009-10 period.
“The country has to go a long way to fully unravel its FDI potential and the government will have to take significant measures aimed at further liberalisation of FDI, thus creating a clean image by tackling corruption, easing the procedural processes and building robust infrastructure to make India an emerging investment hub, going forward,” Arun Singh, senior economist, Dun & Bradstreet India, said.
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