India's share of FDI inflow increased in 2018: World Investment Report

The report remained “moderately optimistic” over the prospects of FDI inflows to Asia

India's share of FDI inflow increased in 2018: World Investment Report

Amid concerns over growth and manufacturing, the UNCTAD's World Investment Report 2019, released in Geneva on Wednesday, remained “moderately optimistic” over the prospects of foreign direct investment inflows to Asia.

India's share of FDI inflow rose by 6 per cent to $42 billion. The report says that “strong inflows” of FDI in India were in the areas of manufacturing, communication, financial services and cross-border merger and acquisition activities.

While the government has been trying to revive local manufacturing, the Indian economy has been pretty much driven by the FDI inflows in the last five years.

The foreign direct investments to China increased by 4 per cent, to an all-time high of $139 billion, accounting for more than a tenth of the world's total. According to the World Investment Report 2019, more than 60,000 new companies were set up by the FDI route in the country in 2018.

Meanwhile, India has been the largest recipient in the South Asian region, which in total notched up a 3.5 per cent rise in FDIs—$54 billion in absolute terms.

Foreign direct investment inflows to developing countries in Asia as a whole rose by 3.9 per cent to $512 billion in 2018, and the region remained the world’s largest FDI recipient, absorbing 39 per cent of global inflows in 2018, up from 33 per cent in 2017.

“The moderate optimism could well be cautious optimism with regard to higher FDI inflows this year. Prospects are underpinned by a doubling in value of announced greenfield projects in the region, suggesting continued growth potential for FDI. However, uncertainties stemming from global trade tensions could weigh on the mood,” says the report.

On outflows, bilateral cooperation under the Belt and Road Initiative is expected to continue to encourage outward FDI, particularly in infrastructure.

The report points to a reduced outflow from Asia, mainly due to reduced investment from China for a second year.