India witnesses 9% dip in FDI inflows: UN

Study shows cross- border M& As rose to $ 23 billion

United Nations, June 7: Foreign Direct Investment to India decreased to $ 40 billion last year from $ 44 billion in 2016 while outflows from India, the main source of investment in South Asia, more than doubled, according to a new trade report by the UN.

According to the World Investment Report 2018 by the UN Conference on Trade and Development ( UNCTAD) global foreign direct investment flows fell by 23 per cent in 2017, to $ 1.43 trillion from $ 1.87 trillion in 2016.

“Downward pressure on FDI and the slowdown in global value chains are a major concern for policymakers worldwide, and especially in developing countries,” UNCTAD Secretary- General Mukhisa Kituyi said.

FDI to India decreased from $ 44 billion in 2016 to $ 40 billion in 2017. But outflows from India, the main source of FDI in South Asia, more than doubled to $ 11 billion, the report said.

The report cited India’s state- owned oil and gas company ONGC’s active investment in foreign assets in recent years.

After acquiring a 26 per cent stake in Vankorneft, an affiliate of Russia’s national oil company Rosneft PJSC, in 2016, ONGC bought a 15 per cent stake in an offshore field in Namibia from Tullow Oil in 2017.

By the end of 2017, ONGC had 39 projects in 18 countries, producing 2,85,000 barrels of oil and oil- equivalent gas per day, the report said.

The report said that cross- border merger and acquisitions sales for India rose from $ 8 billion to $ 23 billion driven by a few large deals in extractive and technology related industries.

Singapore’s Petrol Complex, owned by Russia’s Rosneftegaz acquired a 49 per cent stake of Essar Oil, the second largest privately owned Indian oil company, for $ 13 billion.

An investor group, including eBay, Microsoft and China’s Tencent Holdings acquired a stake in Flipkart Internet for $ 1.4 billion, and Soft Bank acquired a 20 per cent stake in One97 Communications, the parent of digital payments leader Paytm, for $ 1.4 billion.

The report said that globally, the net crossborder M& A purchases of transition- economy MNEs rebounded from $ 809 million in 2016 to almost $ 14 billion in 2017, due to two large transactions, including Rosneft acquiring a 49 per cent share in Essar Oil in India for close to $ 13 billion.

Developing- economy investors from China and South Africa, followed by Singapore, India and Hong Kong ( China), are among the top 10 investors in Africa.