In 2019, India earned USD 51 billion in foreign investments and, according to a report by the United Nations Trade Organization, it became the ninth-largest recipient of international direct investments (FDI) in 2019.
The United Nations Conference on Trade and Development (UNCTAD), on Monday, stated in a report that slower but positive India economic growth will continue to attract market-oriented investments during the post-COVID19 pandemic.
The UNCTAD’s World Investment Report 2020 states that India was the ninth-largest FDI receiver in 2019 with a yearly inflow of $51 billion, up from the $42 billion of 2018 FDI, when India was twelve of the top 20 global host economies.
India was one of the top five host economies for FDI in the “developing Asia” region.
The report says global FDI flows will decline by up to 40 % by 2020, from USD 1.54 trillion in 2019.
For the first time since 2005, worldwide FDI is below USD 1 trillion.
Foreign direct investment in Asian developing economies is projected to decline by as much as 45 percent in 2020 as a result of a severe economic downturn caused by the coronavirus pandemic.
FDI is also anticipated to contract strongly in South Asia in 2020.
The report added that both lockdown and recovery continue to pose a major downside risk on FDI in India in the medium-term.
In the first quarter of 2020, investors concluded deals worth more than $650 million, primarily in Indian digital markets.
Big energy deals have also been concluded, for example, with the purchase of Adani Gas, estimated at $800 million by Total (France).
In 2019, South Asian FDI flows increased by 10 percent to USD 57 billion, driven largely by a rise in India investments, which further relaxed investments (including retail, insurance, and downstream coal processing) in the mid-2019 period.
FDI has increased from 20% to USD 51 billion to India, the biggest recipient in South Asia, sustaining the rising trend in FDI, the report says.
ICT investments in India have evolved from IT services for global businesses to a rapidly growing local digital ecosystem, attracting international investment by many local and regional digital champions, especially e-commerce (such as Flipkart and Zomato).
M&A operation was also funded by numerous mega-deals. Investments in internet companies amounting to USD 2.7 billion 14 as well as the purchase by a Japanese-Indian Joint Venture of US$ 7 trillion from Essar Steel (India).
South Asian outflows grew by 6%, driven by Indian investment. However, they remained small, accounting for only 1 % of global outflows.
In India, companies are the largest investors in the subregion, with over 90% of the outflows in 2019.
Investments from India are projected to decrease by 2020. Because of the impact of the pandemic, the largest MNE will revise its earnings by 25 percent in early 2020.
The report says that innovations in Asia are seriously affected by their susceptibility to disruptions in the supply chain, the weight of global FDIs in the region that are heavily value chains, and global pressures to diversify production sites.
