As per the United Nation Conference on Trade and Development’s (UNCTAD) ‘Investment Trends Monitor’ published in January 19, 2022, the Foreign Direct Investment (FDI) flows to India in 2021 had decreased by 26 percent mainly because large Mergers & Acquisition (M&A) offers recorded in 2020 were not repeated.
- The world’s overseas direct funding flows have rebounded in 2021, which rose at 77 percent to an estimated USD 1.65 trillion, from USD 929 billion in 2020.
Global FDI Flows:
i.Globally – Of the total increase in global FDI flows in 2021 (USD 718 billion), more than USD 500 billion (almost 3 quarters), was recorded in developed economies whereas the Developing economies and the least developed countries (LDCs) showed modest recovery growth.
- As per the report, the outlook for global FDI in 2022 is positive.
ii.Developed Economies – The developed economies noticed that the FDI has reached an estimated USD 777 billion in 2021 which is thrice the exceptionally low degree in 2020.
- FDI flows in the United States, which is the largest host economy, increased by 114 percent to USD 323 billion, and cross-border M&As almost tripled in value to USD 285 billion.
iii.Developing Economies – FDI flows in developing economies increased by 30 percent to nearly USD 870 billion, with a growth acceleration in East and South-East Asia (+20 percent), a recovery to near pre-pandemic levels in Latin America and the Caribbean, and an increase in West Asia.
iv.FDI flows to South Asia decreased 24 percent to USD 54 billion in 2021 from USD 71 billion in 2020.
Key Points of Investment Trends Monitor:
i.FDI inflows in the Association of Southeast Asian Nations (ASEAN) increased by 35 percent with increased FDI across most members.
ii.Greenfield investment project in India had contracted by 19 percent to USD 24 billion and the number of new projects in global value chains (GVCs) including industries, such as electronics were decreased
FDI inflow in India – 2020:
i.The World Investment Report by UNCTAD released in June 2020 revealed that India had received USD 64 billion FDI in 2020 to become the 5th -largest recipient of inflows in the world.
- This rise is because of COVID-19 pandemic which increased the demand for digital infrastructure that led to greenfield FDI project announcements by targeting the information and communication technology (ICT)
ii.FDI to India increased 27 percent to USD 64 billion in 2020 from USD 51 billion in 2019, mainly due to the ICT industry.
About United Nation Conference on Trade and Development (UNCTAD):
Secretary-General – Rebeca Grynspan (1st women & central american to serve as Secretary-General)
Establishment – 1964
Headquarters – Geneva, Switzerland