Inflation | FDI into India rose 13% in 2020 while global inflows sunk to lows seen in ‘90s
NEW DELHI: Boosted by investments in the digital sector, foreign direct investment (FDI) in India grew 13% to $57 billion in 2020, the United Nations Conference on Trade and Development (UNCTAD) said in its ‘investment trends monitor’ report even as the global inflows plummeted 42% compared to 2019.
“India, another major emerging economy, also recorded positive growth (13%), boosted by investments in the digital sector,” it said in its preliminary estimates for 2020.
China was the world’s largest FDI recipient, with flows to the Asian giant rising by 4% to $163 billion, according to UNCTAD.
As per official data, FDI equity inflows into India grew 21% to $35.33 billion in the April-October period of fiscal 2021 from $29.31 billion a year earlier.
Global FDI collapsed in 2020 to an estimated $859 billion from $1.5 trillion in 2019.
“Such a low level was last seen in the 1990s and is more than 30% below the investment trough that followed the 2008-2009 global financial crisis,” UNCTAD said.
As per the Geneva-based organisation, India and Turkey are attracting record numbers of deals in IT consulting and digital sectors, including e-commerce platforms, data processing services and digital payments. Indian IT companies have announced a 30% increase in acquisitions, targeting European and other markets for information technology services.
Attributing the rise in investments in the digital economy to acquisitions, UNCTAD said that cross-border M&A sales grew 87% to $23 billion.
“A notable deal was the acquisition of 10% of Jio Platforms, by Jaadhu, owned by Facebook (US) valued at $5.7 billion,” it said, adding that infrastructure and energy deals also propped up M&A values in India.
FDI in South Asia rose by 10% to $65 billion.
Going ahead, despite projections for the global economy to recover in 2021 – albeit hesitant and uneven – UNCTAD expects FDI flows to remain weak due to uncertainty over the evolution of the Covid-19 pandemic.
“The effects of the pandemic on investment will linger. Investors are likely to remain cautious in committing capital to new overseas productive assets,” said James Zhan, director of UNCTAD’s investment pision.
It had projected a 5-10% FDI slide in 2021 in last year’s World Investment Report.