Govt examines FDI policy as inflows record first decline in six years in FY 19

The government is reviewing India's Foreign Direct Investment (FDI) policy to look into avenues that can be opened to offshore investors and sectors that face challenges despite being allowed to invest under the automatic route.

"We have started a review and have asked all stakeholders to check for areas that can be opened up and if the automatic route is actually being used in existing sectors," an official told the Economic Times.

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The government wants to know from the stakeholders the problems and challenges they are facing or if any other regulators are creating problems for them, the official added.

Meanwhile, another official said that the slump in the inflows was minimal and should not be of concern albeit the government is examining the causes for the fall.

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The move to examine the existing policy comes after the FDI equity inflows in India dropped for the first time in the last six years in 2018-19, plunging by 1% to $44.37 billion as overseas fund inflows subsided in telecom, pharma and other sectors, official data showed.

According to the latest data of the Department for Promotion of Industry and Internal Trade (DPIIT) released Tuesday, FDI in 2017-18 was a record $44.85 billion.

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While foreign investments slumped 56% to $2.7 billion in telecommunications, they fell 74% to $266 million in Pharmaceuticals and 32% to $1.1 billion in the power sector. This drop came even after the government has allowed the foreign investors to own up to 100% stake in telecom and pharma companies.

Last time it was in 2012-13 when foreign inflows had registered a contraction of 36 per cent to $22.42 billion compared to $35.12 billion in 2011-12.

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