fdi in india and its growth linkages - Department Of Industrial Policy ...

Table 2.7
FDI in India in the Service Sector (US$ million)
FDI SCENARIO IN INDIA: TRENDS AND POLICIES
Category 2005 2006 2007 2008 Cumulative Share
FDI* (per cent)
Financial 344.2 1912.2 1345.9 3982.9 7585.2 47.0
Non-Financial Services 0.4 47.4 576.9 689.0 1313.7 8.1
Banking Services 82.9 131.8 552.0 847.2 1613.8 10.0
Insurance 69.7 74.6 276.8 636.9 1057.9 6.6
Outsourcing 11.4 32.0 126.7 372.8 542.9 3.4
Research & Development 22.0 36.9 73.0 433.3 565.2 3.5
Other Services 184.0 1704.0 493.9 1081.5 3463.4 21.5
Sector Total 714.6 3938.8 3445.1 8043.6 16142.1 100.0
Source: SIA Newsletters (various issues); *(2005-2008).
Table 2.8
Share of Service Sector FDI Inflows in Total FDI Inflows to India (%)
Category 2005 2006 2007 2008
Financial 7.9 17.2 7.0 12.1
Non-Financial Services 0.0 0.4 3.0 2.6
Banking Services 1.9 1.2 2.9 1.9
Insurance 1.6 0.7 1.4 2.1
Outsourcing 0.3 0.3 0.7 1.1
Research & Development 0.5 0.3 0.4 1.3
Other Services 4.2 15.3 2.6 3.3
Sector Total 16.4 35.4 18.0 24.4
Source: SIA Newsletters (various issues).
With financial services having the highest share in total FDI in the service sector, it shows consistency in its shares in
the sense that its share, along with banking services, is continuously increasing (Table 2.8).
2.7 State-wise Distribution of FDI
The state-wise trends in FDI show that the RBI’s regional offices at Maharashtra, New Delhi, Karnataka, Tamil
Nadu and Gujarat have been the largest recipients of FDI in terms of cumulative FDI inflows from January 2000 to
October 2008 (Table 2.9). These states are either known for their strong industrial base (like Gujarat) or as software
hubs (like Karnataka and Delhi). This could also be attributed to their better resources, infrastructure like roads and
power, investor-friendly policies like single-window clearances and investment promotion schemes like special
economic zones. However, the competition among the states to promote their own state in attracting FDI has led to
an increasing trend in FDI in other states.
2.8 Country-wise FDI Inflows
Among the countries heading the list of FDI inflows into India is Mauritius (Table 2.10, Figures 2.4 and 2.5). This
could be attributed to the double taxation treaty that India has signed with Mauritius and also to the fact that most
US investment into India is being routed through Mauritius. However, Singapore is the second largest investor in
India followed by the US and other developed countries like the UK and the Netherlands, which are India’s major
trading partners. Table 2.10 shows the share of the top investing countries in India’s FDI for the two sub-periods
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