Wow! Whopping USD 51 billion investment in India! World's 9th largest recipient of FDI in 2019, confirms UN report

It's a big shot in the arm of India in terms of foreign direct investments (FDI) and post-Covid-19 economic scenario. According to a report by the UN's trade body, India received USD 51 billion in foreign investment in 2019 and was the world's 9th largest recipient of foreign direct investments (FDI) in 2019. The UN Conference on Trade and Development (UNCTAD) said in a report that a lower but positive economic growth in India in the post-COVID19 pandemic period and India's large market will continue to attract market-seeking investments to the country.

World Investment Report 2020 by the UNCTAD

- The World Investment Report 2020 by the UNCTAD said that India was the 9th largest recipient of FDI in 2019, with 51 billion dollars of inflows during the year, an increase from the 42 billion dollars of FDI received in 2018, when India ranked 12 among the top 20 host economies in the world.

- In the developing Asia region, India was among the top five host economies for FDI

- The digital economy and real estate and property development, two industries that attracted growing FDI before the pandemic, could evolve in different directions, the report said adding that the digital economy will likely see continued investments, real estate and property development will face significant pressures from slowing demand and financing constraints.

- India's most sought-after industries, which include professional services and the digital economy, could see a faster rebound as global venture capital firms and technology companies continue to show interest in India's market through acquisitions, the report said.

- The report noted that investors concluded deals worth over $650 million in the first quarter of 2020, mostly in the digital sector in India.

- FDI flows to South Asia increased by 10 per cent to USD 57 billion in 2019, the growth driven largely by a rise in investment in India, which further relaxed investment barriers in mid-2019 (including in retail, insurance and downstream coal processing).

- FDI to India, the largest South Asian recipient, increased 20 per cent to USD 51 billion, sustaining the country's upward FDI trend, the report said.

- Most of the investments were in the information and communication technology and the construction industry

- The report said that global FDI flows are forecast to decrease by up to 40 per cent in 2020, from their 2019 value of USD 1.54 trillion. This would be for the first time since 2005 that global FDI falls below the USD 1 trillion mark.

- Foreign direct investment to developing economies in Asia, hit hard by the economic downturn caused by the coronavirus pandemic, are projected to decline by up to 45 per cent in 2020.

- In South Asia, FDI is also expected to contract sharply in 2020.

- In India, the biggest FDI host in the subregion, with more than 70 per cent of inward stock, the number of greenfield investment announcements declined by four per cent in the first quarter, and Merger & Acquisitions contracted by 58.

- However, the country's economy could prove the most resilient in the region. FDI to India has been on a long-term growth trend. Positive, albeit lower, economic growth in the post-pandemic period and India's large market will continue to attract market-seeking investments to the country, the report said. It added that the magnitude of the logistical challenges during both the lockdown and the recovery remain a big downside risk for FDI in the medium term for India.

Moreover, the report stressed that global FDI flows will be under severe pressure this year as a result of the COVID-19 pandemic, dropping well below the trough reached during the global financial crisis and undoing the already lackluster growth in international investment over the past decade.

"The outlook is highly uncertain. Prospects depend on the duration of the health crisis and on the effectiveness of policies mitigating the pandemic's economic effects," said UNCTAD Secretary-General Mukhisa Kituyi.