FDI inflows declined 26% in October this year compared to the same month last year, commerce minister Kamal Nath told the Lok Sabha on Tuesday. Experts attribute this fall after seven months of robust growth to the drying up of investments from countries hit by the global slowdown.
The inflows in September 2008 had registered a steep growth of 259% to $2.56 billion against $713 million in September 2007. In contrast, the figure for October 2008 fell to $1.49 billion compared to over $2 billion in October 2007.
However, experts caution that a part of the October decline could also be attributed to a higher base in 2007 as FDI flow during the month was almost three times higher than in September 2007.
A number of big deals during the fiscal, including Japanese pharma company Daichi Sankyo’s buyout of Ranbaxy, resulted in a sharp 137% growth in FDI inflows in April-September 2008 to $17.25 billion compared to $7.25 billion in the same period of the previous fiscal.
FDI inflows during April-October 2008 were at $18.7 billion. German company Fresnius Kabi also picked up over 90% stake in Dabur Pharma for $200 million during the period.
Replying to a question in the lower house, the minister pointed out that studies by international agencies had predicted that FDI flows to developing economics would generally decline. He added that the effect of the slowdown on specific projects and sectors would be difficult to assess.
“Foreign companies including PE funds have slowed down their investments into India. Foreign companies that lined up their India entry plans are also putting those on hold in the wake of the liquidity squeeze,” he said.
Source:Economic Times