The Economic Survey 2017-18, was tabled in both houses of Parliament during the Budget Session. The Survey underlined a positive growth of 15% during 2017-18 (April- October) with regard to FDI equity inflows to the services sector. The Survey points out that the government has undertaken a number of reforms to ensure that India remains an increasingly attractive investment destination including announcement of National Intellectual Property Rights (IPR) policy, implementation of GST, reforms for ease of doing business.

The Survey adds that the FDI policy provisions were radically overhauled across sectors namely, construction development, broadcasting, retail trading, air transport, insurance and pension. At present, more than 90% of FDI inflows are through automatic route. After the successful implementation of the e-filing and online processing of FDI application by the Foreign Investment Promotion Board (FIPB), the government has announced to phase out the FIPB in the Union Budget 2017-18. Recently, on January 10, 2018, the Cabinet approved amendments in FDI policy allowing 100% FDI under automatic route for Single Brand Retail Trading. Foreign airlines also have been allowed to invest up to 49% in Air India.

Though there is ambiguity in the classification of FDI in services, it is the combined FDI share of the top 10 service sectors such as financial and non- financial services falling under the Department of Industrial Policy & Promotion (DIPP)’s service sector definition; as well as telecommunications; trading; computer hardware & software; construction; hotels & tourism; hospital & diagnostic centers; consultancy services; sea transport; and information & broadcasting that can be taken as the best estimate of services FDI. However, these could include some non-service elements.

The share of these services is 56.6% of the cumulative FDI equity inflows during the period April 2000-October 2017 and 65.8% of FDI equity inflows during 2017-18 (April-October). If the shares of another 5 services or service related sectors like retail trading, agriculture services, education, book, printing and air transport are included, then the total share of FDI equity inflows to the services sector would increase to 58.5 per cent and 69.6 per cent respectively for the above two periods. In 2016-17, FDI equity inflows to the services sector (top 10 sectors including construction) declined by 0.9% to USD 26.4 billion, though the overall FDI equity inflows grew by 8.7%. However, during 2017-18 (April-October), the FDI equity inflows to these services sector grew by 15.0%, as compared to 0.8% growth in total FDI equity inflows, mainly due to higher FDI in two sectors i.e. telecommunications and computer software and hardware.