Ground Report | New Delhi: The World Investment Report 2021 of the United Nations Conference on Trade and Development which was issued on Monday, India received $64 billion in Foreign Direct Investment in 2020, making it the world’s fifth-largest recipient of inflows. The COVID-19 second wave in the country is weighing heavily on the country’s overall economic activities, but its strong fundamentals provide “optimism” for the coming months. FDI into India surged by 27% to $64 billion in 2020 from $51 billion in 2019, due to acquisitions in the information and communication technology (ICT) sector.
Global demand for digital infrastructure and services increased as a result of the pandemic. Greenfield FDI project announcements targeting the ICT industry increased by more than 22% to $81 billion as a result of this. The report said FDI into South Asia increased by 20% to $71 billion, owing to significant M&A activity in India.
Among the major project announcements in the ICT industry was Amazon’s $2.8 billion investment in India’s ICT infrastructure. Moreover, The acquisition of Jio Platforms by Jaadhu, a Facebook subsidiary, for $5.7 billion, the acquisition of Tower Infrastructure Trust by Brookfield Infrastructure and GIC (Singapore) for $3.7 billion, and the sale of Larsen & Toubro India’s electrical and automation division for $2.1 billion were all major transactions.
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Other South Asian economies that rely on export-oriented garment manufacturing, on the other hand, saw a drop in FDI. Inflows to Bangladesh and Sri Lanka both decreased by 11% and 43%, respectively. According to the report, FDI into Pakistan fell by 6% to $2.1 billion, aided by ongoing investments in power generation and telecommunications (World Investment Report).
Inflows of foreign direct investment into developing Asia increased by 4% to $535 billion in 2020, making it the only region to see growth and boosting Asia’s share of global inflows to 54%.FDI into China climbed by 6% to $149 billion. While some of the largest economies in emerging Asia, such as China and India, had an increase in FDI in 2020, the other saw a decrease, according to the report.
In the second half of 2020, prospects of trade and industrial output recovery create a good platform for FDI growth in 2021. However, many economies in the region continue to face significant downside risks as they struggle to contain consecutive waves of COVID-19 cases and have little budgetary capacity for recovery spending, the report indicated.
The pandemic has led to increased investment in information and communication technology (ICT), health, infrastructure, and energy sectors in South Asia. Talking about our other neighbours, Pakistan’s foreign direct investment has declined by 6 percent. Because of this, it has come down to $ 210 million. Despite this, there has been an increase in investment in the field of energy and telecommunication. There has been a decrease of 11 percent in Bangladesh and 43 percent in Sri Lanka (World Investment Report).
On the other hand, if we look at the investment i.e. FDI outflow by India in other countries, then, in this case, India was ranked 18th among the top 20 economies of the world. In 2020, there was an FDI outflow of $ 1,200 million from India, which was $ 1,300 million in 2019.