According to the United Nations Conference on Trade and Development (UNCTAD)’s 2024 World Investment Report: Investment facilitation and digital government, India‘s Foreign Direct Investment (FDI) inflows fell by 43% in 2023, from USD 49 billion in 2022 to USD 28 billion in 2023.
- With this, India‘s rank among FDI recipients dropped to 15th in 2023 from 8th in 2022.
- India’s rank for FDI outflows improved to 20th in 2023 from 23rd in 2022.
Key Points:
i.India has retained its spot among the Top 5 for both kinds of FDI, the greenfield projects and international project finance deals.
ii.India slipped one rank and became the 4th largest host economy for greenfield project announcements in 2023. India retained its 2nd rank in international project deals.
Top 5 Host economies:
| 2023 Rank | Country | FDI inflows (billions USD) | |
|---|---|---|---|
| 2023 | 2022 | ||
| 1 | The United States of America(USA) | 311 | 332 |
| 2 | China | 163 | 189 |
| 3 | Singapore | 160 | 141 |
| 4 | Hong Kong, China | 113 | 110 |
| 5 | Brazil | 66 | 73 |
| 15 | India | 28 | 49 |
Top 5 Home Economies:
| 2023 Rank | Country | FDI inflows (billions USD) | |
|---|---|---|---|
| 2023 | 2022 | ||
| 1 | USA | 404 | 366 |
| 2 | Japan | 184 | 162 |
| 3 | China | 148 | 163 |
| 4 | Switzerland | 105 | -74 |
| 5 | Hong Kong, China | 104 | 106 |
| 20 | India | 13 | 15 |
Note:
- The home country is where the FDI originates, while the host country is where the FDI goes.
- 9 economies in Asia are among the top 20 home economies of outflows
- FDI Inflows declined in more than half of the top 20 recipients
Global FDI trends:
i.Global FDI decreased marginally by 2% to USD 1.3 trillion in 2023, with a sharper decline of over 10% (when excluding certain exceptions) in global foreign investments for the 2nd consecutive year.
- This decline is due to increasing trade and geopolitical tensions in a slowing global economy.
ii.FDI flows to developing countries dropped 7% to USD 867 billion, reflecting an 8% decrease in developing Asia.
iii.Among the top 20 host economies, significant FDI declines were noted in France, Australia, China, the USA, and India.
Regional trends:
i.FDI in developing Asia fell by 8% to USD 621 billion, with China experiencing a rare decline.
ii.The continent, led by East and Southeast Asia, continued to be the world’s largest recipient of FDI, accounting for nearly half of global inflows.
iii.Cross-border Mergers and Acquisitions (M&A), declined by almost USD 30 billion to USD 57 billion in 2023. This decline accounted for about half of the total drop in FDI inflows to the region.
- Cross-border M&A usually constitutes 10% to 15% of foreign investments in developing Asia.
Key Highlights:
i.Investment in sectors linked to the Sustainable Development Goals (SDGs) was reduced by 10%, with fewer internationally financed projects in some sectors compared to 2015.
ii.There’s a global push for investment facilitation, with 86% of investment policy measures in developing economies being favorable to investors in 2023.
iii.The use of digital tools like online single windows and information portals for investment facilitation has increased significantly since 2016.
- In developing countries, it has almost quadrupled from 13 to 67 and in developed economies, the number more than doubled from 12 to 28.
About United Nations Conference on Trade and Development (UNCTAD):
UNCTAD within the United Nations Secretariat that promotes the interests of developing countries in world trade.
Secretary-General– Rebeca Grynspan(Costa Rica) (1st woman to hold the post)
Headquarters– Geneva, Switzerland
Founded– 30 December 1964
