Robust Inflow of FDI in the Services Sector

Robust Inflow of FDI in the Services Sector India’s Share of Services Exports Increasing Faster than Share of Merchandise Exports

The FDI inflows in the services sector grew robustly at 57.62% compared to the growth of overall FDI inflows at 33.6%, in 2011-12. However, in April-November, 2012-13, overall FDI inflows fell by 43.3% to US $ 15.85 billion from US $ 27.93 billion in the corresponding period in the previous year. FDI inflows in the top five services also fell by 9.7% to US $ 8.19 billion. The Government has taken many policy initiatives to liberalize FDI policy for services sector. This includes increasing FDI limit from 49 to 74% in teleports and DTH and cable networks, permitting FDI upto 74% in mobile TV, upto 49% in scheduled and non-scheduled air transport services and upto 50% in multi-brand retail trading. The Government has also amended the existing policy on FDI in single brand product retail trading. The share of services export of India in the world exports of services has been increasing faster than the share of merchandise exports in world exports. It grew from 0.6% in 1990 to 1% in 2000 and 3.3% in 2011. The overall openness of the economy reflected by total trade including services as a percentage of GDP shows higher degree of openness at 55% in 201-12 as compared to 38.1% in 2004-05. The openness indicator based only on merchandise trade is 43.2% in 2011-12, as compared to 28.3% in 2004-05.