India Fifth Largest FDI Receiver in World in 2020: UN
India received $64 billion in Foreign Direct Investment in 2020, the fifth largest recipient of inflows in the world, according to a UN report which said the COVID-19 second wave in the country weighs heavily on the country's overall economic activities but its strong fundamentals provide "optimism" for the medium term. The World Investment Report 2021 by the UN Conference on Trade and Development (UNCTAD), released Monday, 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. The report said in India, FDI increased 27 per cent to $64 billion in 2020 from $51 billion in 2019, pushed up by acquisitions in the information and communication technology (ICT) industry, making the country the fifth largest FDI recipient in the world. The pandemic boosted demand for digital infrastructure and services globally. This led to higher values of Greenfield FDI project announcements targeting the ICT industry, rising by more than 22 per cent to $81 billion. Major project announcements in the ICT industry included a $2.8 billion investment by online retail giant Amazon in ICT infrastructure in India. The report noted that the second wave of the COVID-19 outbreak in India weighs heavily on the country's overall economic activities. Announced greenfield projects in India contracted by 19 per cent to $24 billion, "and the second wave in April 2021 is affecting economic activities, which could lead to a larger contraction in 2021," it said, adding that the outbreak in India severely hit main investment destinations such as Maharashtra, which is home to one of the biggest automotive manufacturing clusters (Mumbai-Pune-Nasik-Aurangabad) and Karnataka (home to the Bengaluru tech hub), which face another lockdown as of April 2021, exposing the country to production disruption and investment delays. "Yet India's strong fundamentals provide optimism for the medium term. FDI to India has been on a long-term growth trend and its market size will continue to attract market-seeking investments. In addition, investment into the ICT industry is expected to keep growing," the report said. The report said FDI in South Asia rose by 20 per cent to $71 billion, driven mainly by strong M&As in India. "Amid India's struggle to contain the COVID-19 outbreak, robust investment through acquisitions in ICT (software and hardware) and construction bolstered FDI," it said adding that cross-border M&As surged 83 per cent to $27 billion, with major deals involving ICT, health, infrastructure and energy.
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