FDI inflow dips 26% in 2021: Unctad

FDI flows to India were 26 per cent lower in 2021, according to an UN body. The FDI inflow of 2021 was even lower than that of 2019, in the absence of large M&A deals.

According to Unctad, the decline in FDI in 2021 was mainly because large mergers and acquisitions (M&A) deals recorded in 2020 were not repeated last year. India's FDI inflow stood at $64 billion in 2020 and has declined to $47.36 billion in 2021. This is lower than $51 billion attracted in 2019.

In 2020, investments had grown 25 per cent due to the acquisitions in the information and communication technology (ICT) industry. India had improved its global ranking from the eight position to fifth in 2020.

Large transactions inclu-ded the acquisition of Jio Platforms by Facebook's subsidiary Jaadhu for $5.7 billion, the acquisition of Tower Infrastructure Trust by Brookfield and GIC

Singapore for $3.7 billion and the sale of the electrical and automation division of L&T India for $2.1 billion.

Global foreign direct investment (FDI) flows showed a strong rebound in 2021, up 77 per cent to an estimated $1.65 trillion, from $929 billion in 2020, surpassing their preCovid-19 level.

"Recovery of investment flows to developing countries is encouraging, but stagnation of new investment in least developed countries in industries important for productive capacities, and key Sustainable Development Goals (SDG) sectors - such as electricity, food or health-is a major cause for concern," said Unctad Secretary-General Rebeca Grynspan.

In Europe, more than 80 per cent of the increase in flows was due to large swings in conduit economies. Inflows in the United States more than doubled, with the increase entirely accounted for by a surge in crossborder mergers and acquisitions.