India saw a 27 per cent rise in Foreign Direct Investment to USD 64 billion in 2020, said UNCTAD’s World Investment Report published on Monday.
“FDI in South Asia rose by 20 per cent to USD71 billion, driven mainly by a 27 per cent rise in FDI in India to USD 64 billion,” said the Report.
“In India, robust investment in ICT and construction bolstered FDI inflows. Cross-border M&As surged 83 per cent to USD 27 billion, with major deals involving ICT, health, infrastructure and energy.”
The report said FDI fell in other South Asian economies that rely on export-oriented garment manufacturing.
“Inflows in Bangladesh and Sri Lanka contracted by 11 per cent and 43 per cent respectively. In Pakistan, FDI was down by 6 per cent to $2.1 billion, cushioned by continued investments in power generation and telecommunication industries,” UNCTAD said.
FDI flows to developing countries in Asia increased by 4 per cent to $535 billion in 2020, reflecting resilience amid global FDI contraction.
“Despite the pandemic, FDI to and from the region remained resilient in 2020. Developing Asia is the only region recording FDI growth, accounting for more than half of global inward and outward FDI flows,” said UNCTAD’s director of investment and enterprise, James Zhan.
“FDI prospects in 2021 for Asia are more favourable than the global average, because of recovery in trade, manufacturing activities and a strong GDP growth forecast,” he added.
The region was the world’s largest FDI recipient in 2019. The Report said global FDI flows are expected to bottom out in 2021 and recover some lost ground with an increase of 10 per cent to 15 per cent.
FDI flows plunged globally by 35 per cent in 2020, to USD 1 trillion from 1.5 trillion the previous year, the report said.
Lockdowns caused by the COVID-19 pandemic around the world slowed down existing investment projects, and the prospects of a recession led multinational enterprises to reassess new projects.