Foreign direct investment (FDI) into India fell 78% to $1.2 billion (Rs 6,971 crore) in June this year, compared to $5.7 billion (Rs 25,371 crore) in 2011, official figures showed on Friday as the government’s financial administrators struggle for options to reverse a worrying slowdown in Asia’s third-largest economy.
FDI, during the first quarter of the current fiscal year (April-June) plunged 67% to $4.4 billion.
Construction, real estate, mining and business and financial services witnessed the largest drop.
India’s economy has slowed 5.3% in the last quarter of 2011-12, the slowest since 2003-04.
The government is expected to issue a clarification on tax policies amid mounting pressures from investors who are waiting for cues from the government on controversial tax proposals.
This, along with uncertainty over general anti-avoidance rule (gaar), has sparked fears among global and domestic investors.
Many big-ticket projects such as the proposed $12-billion investment by Korean steel giant Posco is yet to take off.
Slowing dollar inflow has hit the rupee, which had hit a record low of 57.3 against the dollar in June and is currently hovering around 55 to a dollar, has slid 12% since March.
A weak rupee has stoked inflation by knocking up prices of most imported goods, including crude oil.