FDI inflows into India jump by 13% to $57 billion in 2020: UN report
The Indian economy is seeing an uptick in the recovery post the Covid-19 effects that have led to a slowdown in the economy
Even as the global economy was hit hard by the Covid-19 pandemic, India witnessed a 13 percent rise in Foreign Direct Investment (FDI) to $57 billion in 2020 compared to the previous year. The domestic figure was boosted by investments in the digital economy, said a UN report.
India and China were the only countries that saw FDI rising in 2020, while the rest of the world, including the developed economies like the US and the UK, saw sharp declines. This was revealed by UNCTAD’s investment trends monitors’ report released on Sunday.
The report further noted that cross border M&A sales grew by 83 percent to $27 billion, a notable deal being the acquisition of nearly 10 percent of Jio Platforms by Jaadhu- owned by Facebook for $5.7 billion.
The Indian economy is seeing an uptick in the recovery post the Covid-19 effects that have led to a historic slowdown in the economy.
The report said China became the largest recipient of FDI, attracting an estimated $163 billion in inflows, followed by the US with $134 billion.
The pandemic triggered havoc across global economies and the report noted global FDI collapsed in 2020. FDI in ASEAN was also down by 31 percent.
The report says that data on an announcement basis – on M&As, greenfield investments, and project finance – provides a mixed picture on forward trends and confirms the weak outlook for 2021.
“Greenfield project announcements in 2020, 35% lower than in 2019, do not bode well for new investment in industrial sectors in 2021,” the report says.
The report warns that “the far more limited capacity of developing countries to roll out economic support packages to stimulate investment in infrastructure will result in an asymmetric recovery of project-finance-driven FDI.”
UNCTAD expects any increases in global FDI flows in 2021 to come not from new investment in productive assets but cross-border M&As, especially in technology and healthcare – two industries affected differently by the pandemic.