A drop in sales of mutual funds is not just limited to India, it seems to be a worldwide phenomenon. As per Investment Company Institute’s 2012 fact book (that reviews trends and activities of the US mutual fund industry), net sales the world over has dropped by 90% between 2011 and 2005.
Europe suffered the worst in 2011 on account of a worsening credit crisis situation as there were net redemptions (more money went out than came in) to the tune of $122 billion. The number of funds grew by a modest 4.5% in 2011 over 2010. A comparison between Top 10 coutries and India according to 2011 data.
Also See full Pdf of the global comparison