During the first seven months of 2010-11, India received FDI inflows worth $12.40 billion, according to Commerce and Industry Ministry. The inflows during April-October this fiscal are also down by 29.7 per cent compared to $17.64 billion FDI rush witnessed in the comparable period of last year.
The inflows remained low-key despite a recent World Bank study saying that the FDI flows into developing countries, including India, is expected to recover over the next couple of years and is projected to increase by 17 per cent in 2010.
"Sluggish economic recovery in western countries is one of the main reasons for slowdown in FDI in India," an industry official said.
Crisil's principal economist D K Joshi said that FDI inflows are "lumpy in nature" and they keep fluctuating on monthly basis. FDI in September was up 40 per cent from the same month last year.
Before September the investments were witnessed slumping for three months in a row. In August FDI was down by about 60 per cent, in July 49 per cent, while in June the contraction was 46 per cent.
The government is in process of formulating new policies on FDI in defence sector and multi-brand retail. FDI for 2009-10 at $25.88 billion was also lower by five per cent from $27.33 billion in the previous fiscal.