FDI flows to India drop 26% in 2021: UNCTAD

Foreign direct investment (FDI) flows to India fell 26% in 2021 from a year earlier as major mergers and acquisitions recorded in 2020 were not repeated, according to Conference data United Nations on Trade and Development (UNCTAD).

“FDI flows to India fell by 26%, mainly because large M&A deals recorded in 2020 were not repeated,” according to UNCTAD’s Investment Trends Monitor released on January 19.

Global foreign direct investment (FDI) flows showed a strong rebound in 2021, up 77% to around $1.65 trillion, from $929 billion in 2020, surpassing their pre-COVID level -19.

“The resumption of investment flows to developing countries is encouraging, but the stagnation of new investments in least developed countries in industries important for productive capacities and key sectors of the Sustainable Development Goals (SDGs) – such as electricity, food or health – is a major cause for concern,” UNCTAD Secretary-General Rebeca Grynspan said in a statement.

Developed economies saw the biggest increase by far, with FDI reaching around $777 billion in 2021, three times the exceptionally low level of 2020, according to the report.

In Europe, more than 80 percent of the increase in flows was due to large fluctuations in conduit savings. US inflows more than doubled, with the increase entirely due to an increase in cross-border mergers and acquisitions (M&As).

FDI flows into developing economies increased by 30% to almost $870 billion, with an acceleration of growth in East and South-East Asia (+20%), a recovery at levels approaching pre-pandemic levels in Latin America and the Caribbean, and rising in West Asia.

Entries to Africa have also increased. Most recipients across the continent have seen a moderate increase in FDI; the total for the region more than doubled, inflated by a single intra-company financial transaction in South Africa in the second half of 2021.

Of the total increase in global FDI flows in 2021 ($718 billion), more than $500 billion, or nearly three-quarters, was recorded in developed economies. Developing economies, particularly least developed countries (LDCs), experienced a more modest recovery.

China saw a record $179 billion in inflows – a 20% increase – driven by strong FDI in services, while Brazil saw FDI double to $58 billion from a low low in 2020, but admissions remained just below pre-pandemic levels.

The Association of Southeast Asian Nations (ASEAN) resumed its role as the engine of FDI growth in Asia and globally, with inflows up 35% and increases in most members.

(Only the title and image of this report may have been edited by Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)

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