Foreign direct investment in services sector grew 36.5 per cent to 9.15 billion US dollars in 2018-19 fiscal. According to the Department for Promotion of Industry and Internal Trade (DPIIT), the sector attracted FDI worth 6.7 billion dollars in 2017-18 fiscal. Services sector includes finance, banking, insurance, outsourcing, R&D, courier, tech testing and analysis.

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.

Increasing FDI inflows in the services sector is vital as it contributes over 60 per cent to the gross domestic product. The sector accounts for about 18 per cent of the total FDI India received between April 2000 and March 2019.

Other sectors that recorded healthy growth in FDI inflows include computer software and hardware, trading, automobile industry, and chemicals.

Official data showed that the overall FDI inflows declined for the first time in the last six years in 2018-19, falling one per cent to 44.37 billion dollars as foreign investments fell significantly in telecommunication and pharmaceutical sectors.

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.

Foreign investments are crucial for India as the country needs around 1 trillion US dollars for overhauling its infrastructure sector such as ports, airports and highways to boost growth.