February 2021 \ Business & Investment \ FDI AND EXPORTS
FDI flow into India grows 13% in 2020

Foreign Direct Investments (FDI) into India ...

  • Mr James Zhan

Foreign Direct Investments (FDI) into India rose 13 per cent in 2020, backed by investments into the digital sector, said a report by the United Nations Conference of Trade and Development (UNCTAD).

The growth in FDI into India was witnessed despite a slump in investments into other developing economies. FDI flows to developing economies decreased by 12 per cent to an estimated $616 billion and they accounted for 72 per cent of global FDI, the highest share on record, the UNCTAD report said. In a tweet UNCTAD said: “China and India were two major outliers in a gloomy year for foreign direct investment. The two nations recorded positive FDI growth in 2020 even as global levels sunk to lows not seen since the 1990s.” Global FDI collapsed in 2020, falling 42 per cent from $1.5 trillion in 2019 to an estimated $859 billion, according to the UNCTAD Investment Trends Monitor.

Such a low level was last seen in the 1990s and is more than 30 per cent below the investment trough that followed the 2008-2009 global financial crisis. 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 organisation had projected a 5-10 per cent FDI slide in 2021 in last year’s World Investment Report. “The effects of the pandemic on investment will linger,” said James Zhan, director of UNCTAD’s investment division. “Investors are likely to remain cautious in committing capital to new overseas productive assets.”

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