New Delhi: With the government taking steps to improve ease of doing business and attracting investments, FDI inflows into the services sector grew by 20 percent to USD 1.84 billion in the April-November period this fiscal.
The services sector, which includes banking, insurance, outsourcing, R&D, courier and technology testing, had received foreign direct investment (FDI) worth USD 1.46 billion during April-November 2013-14, according to the data of the Department of Industrial Policy and Promotion (DIPP).
The government has announced series of steps such as fixing timelines for approvals to improve ease of doing business in the country and attract domestic and foreign investments.
"The measures are yielding fruits in terms of FDI. In the coming months the FDI inflows will further improve," an official said.
In step with the growth in FDI in important sectors like services, overall foreign inflows in the country too rose by 22 percent to USD 18.88 billion during the eight months of the current fiscal. The amount was USD 15.45 billion in the April-November period of 2013-14.
The services sector contributes over 60 percent to India?s GDP. In 2012-13, foreign investment in services fell to USD 4.83 billion from USD 5.21 billion in 2011-12. In last fiscal, it was USD 2.22 billion only.
The other sectors where inflows have recorded growth telecommunication (USD 2.47 billion), computer hardware and software (USD 862 million), automobile (USD 1.53 billion) and power (USD 550 million).
To attract investment, the government has raised the FDI cap in insurance sector to 49 percent from 26 percent. 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 the strengthens rupee.