In accordance with the “World Investment Report 2020” by United Nation’s (UN) trade body, the UN Conference on Trade and Development (UNCTAD), India has become the 9th largest recipient of foreign direct investment (FDI) in 2019 after receiving $51 billion last year.
- This is an increase of 20% from the 42 billion dollars of FDI received in 2018, when India ranked 12 among the top 20 host economies in the world.
- India is the largest South Asian recipient of FDI in 2019.
Following table shows the top recipients of FDI:
| Rank | Country | Amount |
|---|---|---|
| 1 | United States (US) | $246 bn |
| 2 | China | $141 bn |
| 3 | Singapore | $92 bn |
| 9 | India | $51 bn |
India
-The number of greenfield investment announcements declined by 4% in the first quarter, and Merger & Acquisitions (M&A) contracted by 58.
-Investors concluded deals worth over $650 million in the first quarter of 2020, mostly in the digital sector in India.
-There is lower but positive economic growth in India in the post-COVID19 pandemic period and the country’s large market will continue to attract market-seeking investments.
Developing Asia; Largest FDI recipient region
In the developing Asia region, India was among the top five host economies for FDI viz. China, Hong Kong (China), Singapore, India and Indonesia.
- In 2019, FDI flows into developing Asia declined by 5% to $474 billion
- Despite the decline, it remained the largest FDI recipient region, hosting more than 30% of global FDI flows.
- In 2020, FDI is projected to decline by 30 to 45%.
South Asia
FDI flows to South Asia increased by 10% to $57 billion in 2019, the growth driven largely by a rise in investment in India. However, FDI is expected to contract sharply in 2020.
Global
The global FDI flows are forecast to decrease by up to 40% in 2020, from their 2019 value of $1.54 trillion. This would be for the first time since 2005 that global FDI falls below the $1 trillion mark.
- FDI is projected to decrease by a further 5 to 10% in 2021 and will initiate a recovery in 2022.
Outflows
-Outward FDI flows from Asia declined by 19% to $328 billion due to a 52% drop in Mergers and acquisitions (M&A) purchases by Asian companies in 2019.
-Investment from South-East Asia declined from $63 billion in 2018 to $56 billion
-Outflows from South Asia grew 6%, driven by investment from India. Companies in India are the sub region’s largest investors, with more than 90% of outflows in 2019.
-Investments from India are expected to decline in 2020 due to the impact of the pandemic
-The overall share of developed economies in world FDI outflows is 70% in 2019 from 54% in 2018.
About World Investment Report:
It has been published annually since 1991 focusing on trends FDI worldwide, at the regional and country levels and emerging measures to improve its contribution to development.
About UNCTAD:
Headquarters– Geneva, Switzerland
Secretary-General– Dr.Mukhisa Kituyi
