The uncertainty in the global economy seems to have impacted the flow of foreign funds into India. Coming close on the heels of the decline in exports is the news that foreign direct investment (FDI) declined by 18.3 per cent to $10.77 billion in the first half of 2010.

During January-June 2009, the country received FDI worth $13.19 billion, according to the data released by the Industry Ministry.

The decline in FDI inflows is a cause for concern for the government which is seriously looking at foreign funds to pep up investment in the infrastructure sector.

The continued slump of economic activity in the Western countries and European nations has had an adverse impact on foreign inflows into India, officials in the Ministry said. The sectors which attracted the maximum overseas investment include services, telecommunications, construction activities, housing and real estate, power and automobile.

The country received the maximum investment from countries like Mauritius, the U.S., the U.K., Singapore, the Netherlands and Japan.

The government is making sustained efforts to make the FDI policy regime more attractive and investor-friendly, with a view to attracting investments from all major investing countries, the release added.

The government had recently floated discussion papers for public debate to liberalise FDI in multi-brand retail and the defence sector. FDI at $25.88 billion in 2009-10 was lower by 5 per cent against $27.33 billion in the previous fiscal.