Slowdown? FDI into India slumps 78% in June

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) last year, official figures showed today as the government’s financial administrators struggle for options to reverse a worrying slowdown in Asia’s third-largest economy, HT reports.

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.

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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.