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Government's efforts to promote India as an investment destination does not seem to be yielding fruits as FDI inflows registered 38 % decline to $ 22.42 billion in 2012-13 compared to the previous year.
FDI inflows were worth $ 35.12 billion in 2011-12.
The government had taken several policy decisions in the past few months to attract foreign investments. Important among these include allowing FDI in multi-brand retail and civil aviation sectors and seeking legislative approval for increasing FDI cap in insurance and pension sectors.
In March this year, the country had attracted $1.52 billion FDI, taking the total to $ 22.42 billion in the entire financial year, an official in the Department of Industrial Policy and Promotion (DIPP) told PTI.
Sectors which received large FDI inflows during 2012-13 include services ($ 4.83 billion), hotel and tourism ($ 3.25 billion), metallurgical ($ 1.46 billion), construction ($ 1.33 billion), automobiles ($ 1.53 billion) and Pharmaceuticals ($ 1.12 billion), the official added.
India received maximum FDI from Mauritius ($ 9.49 billion), followed by UK ($ 7.87 billion), Singapore ($ 5.25 billion), Japan ($ 2.97 billion) and United States ($ 1.11 billion).
According to industry experts, there is a need to improve business environment in the country.
In November 2012, India attracted FDI worth $1.05 billion, which was two-year low.
India would require around $1 trillion in the next five years to overhaul its infrastructure sector such as ports, airports and highways to boost growth.
Decline in foreign investments could put pressure on the country's balance of payments and may also impact the value of the rupee.
Rupee declined by 12 paise to end at 11-month low of 56.50 against the US dollar on Friday amid worries over current account deficit and GDP growth.
With FII outflows of $90 million in stocks, RBI's poor inflation outlook and GDP growth rate falling to decade's low of 5% pushed the rupee downwards to 56.76 -- its lowest since June 28, 2012.
Economic growth rate slipped to a decade low of 5% in 2012-13 due to poor performance of farm, manufacturing and mining sectors.
The growth rate in the fourth quarter ending on March 31, stood at 4.8% showing a marginal improvement over 4.7% recorded in the third quarter of 2012-13.
