The World Investment Report 2021 by the UN Conference on Trade and Development (UNCTAD) was released on 21 June 2021.
Global FDI flows:
According to report, global FDI flows have been severely hit by the pandemic. Global FDI flows plunged by 35 per cent in 2020 to USD 1 trillion from USD 1.5 trillion the previous year.
India’s FDI flows:
» In India, according to a UN report, FDI Inflows increased 27 per cent to USD 64 billion in 2020 from USD 51 billion in 2019.
» The FDI inflow was boosted by acquisitions in the information and communication technology (ICT) industry. This makes India the fifth largest FDI recipient in the world.
» India recorded 12 billion dollars of outflows from the country in 2020 as compared to 13 billion dollars in 2019. India ranked 18 out of the world’s top 20 economies for FDI outflows.
Investments from India in 2021:
» Investments from India are expected to stabilise in 2021. India’s resumption of free trade agreement (FTA) talks with the European Union (EU) and its strong investment in Africa will support investments.
FDI in South Asia:
» The report also said FDI in South Asia rose by 20 per cent to USD 71 billion, driven mainly by strong Mergers and Acquisitions (M&As) in India.
» FDI outflows from South Asia fell 12 per cent to USD 12 billion, driven by a drop in investment from India.
» Further, the FDI inflows to Asia grew by 4 percent to USD 535 billion in 2020, making it the only region to record growth. This has increased Asia’s share of global inflows to 54 percent.
» In China, FDI increased by 6 per cent to USD 149 billion. Some of the largest economies in developing Asia such as China and India recorded FDI growth in 2020 while the rest recorded a contraction.
» The UN report also added that FDI inflows in Asia are expected to increase in 2021. FDI inflows to Asia are outperforming other developing regions with a projected growth of 5-10 per cent.