With $64 billion inflow, India world’s 5th largest recipient of FDI in 2020: UNCTAD report
Robust investment through acquisitions in ICT and construction bolstered FDI inflows to India
Foreign Direct Investment (FDI) to India in 2020 increased by 27 percent to $64 billion, pushed up by acquisitions in the Information and Communication Technology (ICT) industry, making it the 5th largest recipient in the world, says UN’s World Investment Report 2021.
Prepared by the UN Conference on Trade and Development (UNCTAD) and released on Monday, the ‘World Investment Report 2021- Investing in Sustainable Recovery’ said global FDI flows have been severely hit by the pandemic and they plunged by 35 per cent in 2020 to $1 trillion from $1.5 trillion the previous year.
It said, lockdowns caused by COVID-19 around the world slowed down existing investment projects, and prospects of a recession led multinational enterprises (MNEs) to reassess new projects.
FDI to India increased 27 per cent to $64 billion in 2020 from $51 billion in 2019, pushed up by acquisitions in the ICT industry, making the country the fifth largest FDI recipient in the world, the UNCTAD report mentioned.
Amid India’s struggle to contain the COVID-19 outbreak, robust investment through acquisitions in ICT (software and hardware) and construction bolstered FDI, it added.
Cross-border Mergers and Acquisitions surged 83 per cent to $27 billion, with major deals involving ICT, health, infrastructure and energy, the UN report said.
Large transactions included the acquisition of Jio Platforms by Jaadhu (a subsidiary of Facebook (United States)) for $5.7 billion, the acquisition of Tower Infrastructure Trust by Brookfield (Canada) and GIC (Singapore) for $3.7 billion and the sale of the electrical and automation division of Larsen & Toubro India for $2.1 billion, it noted.
Another megadeal – Unilever India’s merger with GlaxoSmithKline Consumer Healthcare India (a subsidiary of GSK United Kingdom) for $4.6 billion – also contributed to the increase in FDI in India, said the World Investment Report 2021, the report stated.
Major project announcements in the ICT industry included a $2.8 billion investment by online retail giant Amazon in ICT infrastructure in India, it mentioned.
The report said FDI in South Asia rose by 20 per cent to $71 billion, driven mainly by strong Mergers and Acquisitions in India.
FDI outflows from South Asia fell 12 per cent to $12 billion, driven by a drop in investment from India, it highlighted.
India ranked 18 out of the world's top 20 economies for FDI outflows, with 12 billion dollars of outflows recorded from the country in 2020 as compared to 13 billion dollars in 2019, said the report.
According to it, FDI inflows to developing Asia grew by 4 per cent to $535 billion in 2020, making it the only region to record growth and increasing Asia's share of global inflows to 54 per cent.
In China, FDI increased by 6 per cent to $149 billion, the UNCTAD Investment Report added.
While some of the largest economies in developing Asia such as China and India recorded FDI growth in 2020, the rest recorded a contraction, it said.