India still 2nd best FDI spot: Nomura

Attributing the recent decline to primarily global factors,Nomura India Vice-President and economist Sonal Varma said following the 2008 crisis,other emerging markets too saw sharp drop in FDI inflows but picked up steam after two years unlike India.

8220;Of the USD 12-billion decline in FDI inflows between 2008 and 2010,around 60 per cent was due to weak inflows into service spaces like computer software and hardware,financial services,banking,and construction,8221; Varma said.

8220;The sharp drop in inflows into banking and other financial services is unsurprising as the crisis led firms to restructure operations.

As a result,share of infrastructure in total FDI inflows rose to 24.7 per cent in 2010 from 16.3 per cent in 2007 and that of manufacturing rose to 32.1 per cent from 19.6 percent,despite an fall in the absolute numbers in FY11,8221; she said in her report.

While globally,overcapacity,credit crunch,fragile growth and increased risk aversion led multinational corporations to curtail investment,locally,the environment sensitive policies pursued appear to have affected the investor sentiments,she said.