India gained one notch to emerge the seventh highest foreign direct investments (FDI) recipient in calendar 2021 despite inflows shrinking about 30% to $45 billion from $64 billion in 2020, the United Nations Conference on Trade and Development (Unctad) said on Thursday.

Despite the decline in FDI inflow, a flurry of new international project finance deals was announced in the country – 108 projects compared with 20 projects on average for the last 10 years, the agency said in its World Investment Report.

The largest number of projects announced with foreign funding in India was in renewables at 23. Other large projects include construction of a steel and cement plant for $13.5 billion by ArcelorMittal Nippon Steel (Japan) and a new car manufacturing facility by Suzuki Motor (Japan) for $2.4 billion, it said.

“FDI in China grew 21% and in Southeast Asia by 44%, but South Asia went the other way, falling 26% as flows to India shrank to $45 billion,” the agency said.
Outward FDI from South Asia, mainly from India, however, rose 43% to $16 billion.

Global FDI flows recovered to pre-Covid levels in 2021, reaching nearly $1.6 trillion, the report said. However, this course is unlikely to be sustained in 2022, it added.

The top 10 economies for FDI inflows in 2021 were the US, China, Hong Kong, Singapore, Canada, Brazil, India, South Africa, Russia and Mexico. Among them, only India witnessed a decline in inflows. The US received FDI of $367 billion last year, followed by China at $181 billion and Hong Kong at $141 billion.

Developing Asia, which received 40% of global FDI, saw flows rise in 2021 for the third straight year to an all-time high of $619 billion.

China, Hong Kong, Singapore, India, the United Arab Emirates, and Indonesia accounted for more than 80% of FDI flows to Asia.


International project finance announcements in industrial real estate grew in 2021 and deal numbers tripled to 152 projects with a value of $135 billion.

Of R&D investment in developing economies, India captured almost half of all projects, Unctad said.

American digital multinational enterprises targeted India in 8% of the deals, mostly buying minority stakes to gain access to the market, and to local innovative solutions, it said.

“For example, eBay (US) jointly with Microsoft (US) and Tencent (China), acquired undisclosed minority stake in Flipkart (India) for $1.4 billion in 2017,” Unctad said in the report.

Source: The Economic Times

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