‘India 9th largest recipient of FDI in 2019, will continue to attract investments’

UNITED NATIONS: India received $51 billion in foreign investment in 2019 and was the world's 9th largest recipient of foreign direct investments (FDI) in 2019, according to a report by the UN'S trade body.

The UN Conference on Trade and Development (UNCTAD) said in a report on Monday 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.

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 report said that global FDI flows are forecast to decrease by up to 40 per cent in 2020, from their 2019 value of $1.54 trillion.

This would be for the first time since 2005 that global FDI falls below the $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.

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.