The inflow of foreign direct investment (FDI) into India continued to fall for the third straight month in October, mirroring the global economic slowdown with transnational corporations deferring investments across the world.
FDI equity worth $1.2 billion (Rs 5,715 crore) flowed into India in October, down by nearly 34% compared to September’s $1.8 billion (Rs 8,407 crore), and further down from $2.8 billion (Rs 12,814 crore) in August, data released by the government showed on Sunday.
According to economists, there cannot be a more appropriate time to ease norms for foreign investors and attract global capital to boost the Indian economy, which is already battling sliding growth, costly credit, falling rupee and rising inflation.
“Data clearly shows that domestic capital is not sufficient to spur the Indian economy,” said Rajiv Kumar, secretary-general, FICCI. “There is a clear case for liberalising FDI norms to enable companies to raise resources to fund capacity expansion plans.”
Economists said FDI, in a regulated environment, is always a better option than forcing firms to raise debt at high interest rates.