According to the United Nations Conference on Trade and Development (UNCTAD) World Investment Report 2022 entitled “International tax reforms and sustainable investment“, India ranked 7th and placed among the top 10 global economies for Foreign Direct Investment (FDI) in 2021 despite a decline in FDI investment.
- India had USD 64 billion in FDI in 2020.FDI inflows have declined by USD 19 billion to USD 45 billion in 2021.
- However India managed to reach the top 10 economies for FDI inflows in 2021, ranking 7th after the US, China, Hong Kong, Singapore, Canada and Brazil.
- Adding South Africa, Russia and Mexico to the list to round up the top 10 economies for FDI inflows in 2021.
FDI in International projects:
i.Despite the decline in FDI flows, a number of new international project finance deals were announced in India such that 108 projects, compared with 20 projects on average for the last 10 years including the largest number of 23 projects was in renewables.
ii.Large projects include the construction of a steel and cement plant in India for USD 13.5 billion by ArcelorMittal Nippon Steel (Japan) and the construction of a new car manufacturing facility by Suzuki Motor (Japan) for USD 2.4 billion.
FDI in Real estate:
i.In 2021, the real estate deal numbers tripled to 152 projects with a value of USD 135 billion.
ii.Large projects include the construction of a steel and cement manufacturing plant in India for USD 14 billion and the construction of a 960-hectare pharmaceutical park in Vietnam for USD 10 billion.
- More than 60 percent of greenfield investments are in developed economies, especially in Europe (45 percent).
FDI Flows in South Asia:
i.Outward FDI from South Asia, mainly from India, rose by 43 percent to USD 16 billion.
ii.The report reiterated that the Ukraine war will have consequences for international investment in economic development and the Sustainable Development Goals (SDGs) in all countries, particularly FDI flows from Russia and Ukraine.
- In addition multinational enterprises (MNEs) from China and India account for a negligible share of FDI stock in Russia (less than 1 percent), although their share in ongoing projects is larger.
Asia:
i.The FDI in developing Asia rose for the 3rd consecutive year to USD 619 billion, which became the largest recipient region of FDI in the world, accounting for 40 percent of global inflows.
ii.FDI inflows remain highly concentrated in 6 economies (China, Hong Kong, Singapore, India, the United Arab Emirates and Indonesia, in that order) in Asia accounting for more than 80 percent of FDI.
Measures taken to increase India’s FDI:
India’s new measures facilitated the investment by nations that accounted to 40 percent of all measures more favourable to investment.
- India launched the National Single-Window System, which will become a one- stop shop for approvals and clearances needed by investors, entrepreneurs and businesses.
Recent related news:
In Accordance with the Global Trade Update by UNCTAD, the global trade growth will slow in Q1 (first quarter) of 2022. It is due to macroeconomic trends like persistent inflation in the United States (US) and concerns related to China’s real estate sector.
About United Nations Conference on Trade and Development (UNCTAD):
Secretary General – Rebeca Grynspan
Established – 1964
Headquarters – Geneva, Switzerland
Member states – 195 Countries
