World Investment Report 2022

Table of Contents

FDI in India UPSC: Relevance

GS 3: Indian Economy and issues relating to planning, mobilization, of resources, growth, development and employment.

According to the World Investment Report released by the United Nations Conference on Trade and Development (UNCTAD), India remained among the top 10 (India rank: 7) global economies for FDI last year, despite the decline in FDI.

Foreign Direct Investment (FDI) inflows to India declined USD 19 billion to USD 45 billion in 2021.
FDI inflows recovered to pre-pandemic levels last year, hitting nearly USD 1.6 trillion.
FDI in 2022: However, the report suggests a grim picture for global FDI in 2022 and beyond.
Reasons: Security and humanitarian crises caused by the Ukraine war, by macroeconomic shocks set off by the conflict, by energy and food price hikes, and by increased investor uncertainty.

India received USD 64 billion in FDI in 2020, and recorded a decline in FDI inflows in 2021 at USD 45 billion.
But India was still among the top 10 economies for FDI inflows in 2021, ranking 7th after the US, China, Hong Kong, Singapore, Canada and Brazil.
South Africa, Russia and Mexico rounded up the top 10 economies for FDI inflows in 2021.
Outward FDI from South Asia, mainly from India, rose by 43 per cent to USD 16 billion.
United States MNEs (Multi National Enterprises) targeted India in 8 per cent of the deals, mostly buying minority stakes to gain access to the market and to local innovative solutions.
Reason for increase in investment: Investment facilitation measures undertaken by nations accounted for almost 40 per cent of all measures more favourable to investment.

The report noted that the war in Ukraine will have far-reaching consequences for international investment in economic development and the Sustainable Development Goals (SDGs) in all countries.
According to the report, the direct effects of the war on investment flows to and from Russia and Ukraine include the halting of existing investment projects and the cancellation of announced projects, an exodus of multinational enterprises (MNEs) from Russia, widespread loss of asset values and sanctions virtually precluding outflows.

The report said that despite successive waves of COVID-19, FDI in developing Asia rose for the third consecutive year to an all-time high of USD 619 billion, underscoring the resilience of the region.
Moreover, Asia is the largest recipient region of FDI in the world, accounting for 40 per cent of global inflows.
Inflows remain highly concentrated and six economies (China, Hong Kong, Singapore, India, the United Arab Emirates and Indonesia, in that order) accounted for more than 80 per cent of FDI to the region.

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