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UNCTAD Report: India 5th Largest recipient of FDI inflows, US Tops

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India receives $64 bln FDI in 2020According to the ‘World Investment Report 2021’ released by the UN Conference on Trade and Development (UNCTAD) – India received  Foreign Direct Investment (FDI) inflows worth USD 64 billion in 2020 making it the 5th largest recipient of inflows in the world. The US with 156 Billion was the top destination for FDI in 2020 followed by China (USD 149 billion) & Hong Kong, China (USD 119 billion).

  • Global FDI inflows declined to USD 1 Trillion in 2020 (35% decline) compared to USD 1.5 trillion in 2019 due to pandemic.
  • India’s FDI inflow has increased to USD 64 billion in 2020 from USD 51 billion in 2019  (27% increase) due to acquisition in the Information & Communication Technology (ICT) industry.
  • India was ranked 8th in the UNCTAD’s 2020 Report based on its FDI Inflows.

Countries with Largest FDI Outflows

  • Countries with Largest FDI outflows are China (133 billion), Luxembourg (127 billion) & Japan (116 billion). India was ranked 18th with USD 12 billion (compared to USD 13 billion in 2019).

FDI Inflows in 2020

5IndiaUSD 64 billion
1USUSD 156 billion
2ChinaUSD 149 billion
3Hong Kong, ChinaUSD 119 billion

FDI Outflows in 2020

18India USD 12 billion
1ChinaUSD 133 billion
2LuxembourgUSD 127 billion
3JapanUSD 116 billion

Global Scenario

i.The pandemic has boosted the demand for digital infrastructure and services. It has led to high values of greenfield FDI project announcements in the ICT industry, rising by 22% to USD 81 billion.

  • One of the major project announcements in the ICT industry was the USD 2.8 billion investment by Amazon in ICT infrastructure in India.

ii.China FDI inflow has increased by 6% to 149 billion in 2020 from USD 141 billion in 2019.

iii.FDI in South Asia has increased by 20% to USD 71 billion  driven mainly by strong Mergers & Acquisitions (M&A) in India.

India’s Scenario

The 2nd wave of COVID-19 outbreak in India will have a big impact on India’s overall economic activities.

i.Announced greenfield projects in India decreased by 19% to USD 24 billion due to pandemic.

  • COVID-19 outbreak in India has hit main investment destinations like Maharashtra cluster: Mumbai-Pune-Nasik-Aurangabad (one of the biggest automotive manufacturing clusters) & Karnataka (home to the Bengaluru tech hub).
  • India’s Production Linked Incentive (PLI) scheme has the potential to bring investment in the manufacturing sector.

ii.The report also highlighted some of the Largest transactions involving Indian companies.

  • Acquisition of Jio Platforms by Jaadhu, a subsidiary of Facebook for USD 5.7 billion.
  • Sale of the electrical and automation division of Larsen & Toubro India for USD 2.1 billion.
  • Unilever India’s merger with GlaxoSmithKline Consumer Healthcare India, a subsidiary of GSK United Kingdom for USD 4.6 billion.

iii.Investments from India will stabilize in 2021, supported by India’s resumption of Free Trade Agreement (FTA) talks with the European Union (EU) and its strong investment in Africa.

South Asian Scenario

FDI outflows from South Asia fell by 12% to USD 12 billion, due to decrease in FDI outflows from India.

  • FDI inflows to developing Asia increased by 4% to USD 535 billion in 2020 making it the only region to record growth. It increased Asia’s share of global inflows to 54%.
  • FDI inflows in Asia are expected to increase by a projected growth rate of 5-10% in 2021.

Recent Related News:

May 25, 2021, As per the data released by the Ministry of Commerce & Industry, India has attracted the highest ever total Foreign Direct Investment (FDI) inflow of US$81.72 billion during FY21, which is 10 percent more than FY20(US$74.39 billion).

About United Nations Conference on Trade and Development (UNCTAD)

Acting Secretary-General of UNCTAD – Isabelle Durant
Headquarters – Geneva, Switzerland