On Monday, according to the report by UN Conference on Trade and Development (UNCTAD) said that in the post-COVID19 duration is to witness low but positive economic growth in India and India in terms of the huge market will continue to attract market seeking investments to the country.
In January as per the UN report, India was among the top 10 recipients of Foreign Direct Investment in 2019, attracting USD 49 billion in inflows, a 16 percent rise from the last year, driving the FDI growth in South Asia. Later one of the reports said, India was the world’s 9th largest recipients of Foreign Direct Investment and received USD 51 billion in 2019. India was among the top 5 host economies for FDI in the ‘Developing Asia’ region.
The coronavirus pandemic has a downturn impact on the economy which has hit hard FDI to developing economies in Asia, is expected to reduce by up to 45 percent in 2020. This would be for the first time since 2005 that global FDI falls below the USD 1 trillion mark.
The digital economy is going to experience continued investments. However, property development and real estate will face significant pressure from financing constraints and sluggish demand said the report adding to “two industries that attracted growing FDI before the pandemic is the digital economy and real estate property development, could evolve in different directions”.
In 2019, FDI flows from South Asia recipient risen by 20 percent to $51 billion as the development and growth have driven largely by an increase in investment in India. As per the report, FDI to India, the largest South Asian recipient increased 20 percent to $51 billion, sustaining the country’s upward FDI trend. Construction, communication technology, and the information industry were most attractive as many of the investments were made into them.
Some of the mega deals were part of the M&A activity. These include investment in internet companies worth USD 2.7 billion, 14, and $7 billion acquisition of Essar Steel (India) by a Japanese-Indian joint venture. With more than 90 percent of outflows in 2019, companies in India are the subregion’s largest investors.
As export-oriented and commodity-linked investments are one of the most seriously affected due to the downturn of the economy, flow to developing countries will be impacted adversely.
