Prelims level : Economics Mains level : GS-III Technology, Economic Development, Environment
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Why in News:

  • Foreign direct investment (FDI) in the services sector grew 36.5% to $9.15 billion in 2018- 19, according to the Department for Promotion of Industry and Internal Trade (DPIIT).


  • Services sector includes finance, banking, insurance, outsourcing, R&D, courier and analysis. The sector attracted FDI worth $6.7 billion in 2017-18.
  • The sector accounts for about 18 per cent of the total FDI India received between April 2000 and March 2019. Raising FDI inflows in the services sector is vital as it contributes over 60% to the gross domestic product.

Foreign Direct Investment in India

  • Foreign investments are crucial for India as the country needs around $1 trillion for overhauling its infrastructure sector such as ports, airports and highways to boost growth.
  • A strong inflow of foreign investments helps improve the country’s balance of payments situation and strengthens the value of rupee against global currencies, especially the US dollar. However, the overall FDI inflows declined for the first time in the last six years in 2018-19, falling 1 per cent to $44.37 billion as foreign investments fell significantly in telecommunication and pharmaceutical sectors, official data showed. Recently the government has taken several measures like fixing timeliness for approvals and streamlining procedures to improve ease of doing business in the country and attract foreign investments.
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