FDI inflows into India up 13% in 2020: Unctad

Foreign direct investment into India grew 13 per cent in 2020, bucking the global trend of 42 per cent decline. India and China were the only two countries among the top 20 recipients of 2019, which saw FDI growing in 2020, finds a report by UN’S body for trade and development.

India saw FDI rising by 13 per cent to $57 billion as investment in the digital economy continued, particularly through acquisitions. “A notable deal was acquisition of 10 per cent stake in (Reliance owned) Jio platforms by Jaadhu owned by Facebook for $5.7 billion, found Unctad.

Cross border mergers and acquisitions grew 83 per cent to $27 billion. Infrastructure and energy deals also propped up M&A deal values in India. Indian IT firms like Wipro, Mastek and Tech Mahindra announced a rise in deals by 30 per cent, targeting European and other markets for IT services

The growth in FDI inflows into India helped

South Asia witness a growth of 10 per cent to $65 billion. Except for India, FDI inflows fell in other south Asian countries where investments are often tied to exportoriented apparel manufacturing, which suffered significantly due to slump in global demand.

China was the only other economy among the largest 20 recipients of 2019, which recorded a growth in FDI. The FDI inflows into China grew by 4 per cent to $163 billion, making the country the largest recipient in 2020. The US was the second largest recipient with $134 billion.

Globally, FDI fell 42 per cent to $859 billion in 2020 from $1.5 trillion in 2019. It was also 30 per cent lower than the investments in 2009 during the global financial crisis. The share of developing economies in global FDI reached 72 per cent- the highest share on record.

Developed countries saw heavy decline in FDI. Among the top recipients of the previous year, the UK and Italy suffered 100 per cent decline followed by Russia by 96 per cent.

Going ahead, in 2021 global FDI may remain weak, finds Unctad. Although the global economy is expected to initiate a hesitant and uneven recovery in 2021 and GDP growth and gross fixed capital formation and trade are projected to resume growth, investors are likely to remain cautious in committing capital to new overseas productive assets.