India’s rapid growth is a sign that the economy can grow if the right steps have been taken, especially the inflow of FDI.
It remains the fastest-growing economy in the world, and the world has arrived at the Indian stage. When we talk about FDI, India has overtaken countries like America, China and even Britain, who India has a history with. As per the latest reports released by the UNCTAD, in the year 2022, the Foreign Direct Investment(FDI) in India has increased drastically by 10 %, whereas it has left other countries in the dust wherein their countries decreased by 37 per cent.
Before we talk about India’s FDI flow, let’s talk about the FDI figures globally as per figures released by the Organisation for Economic Co-operation and Development(OECD) in its April 2023 report.
Global FDI Outlook – 2023(OECD Report):
The global FDI dropped by 24% in 2022 to USD 1286 billion. Major FDI recipients like China and the US recorded less new investment activity and also lower FDI flows in 2022.
FDI outflows from OECD and non-OECD G20 countries plunged by 14% and 28% respectively. Furthermore, cross borders Merger and Acquisition activity slowed down with fewer deals being concluded in 2022, possibly in response to a tighter financial environment, continued geopolitical challenges, and also involved concerns about the looming recession.
FDI rush in India:
Now that we know the global scenario let’s talk about how India has faired in the economy. According to UNCTAD’s report released, in the year 2022, India left behind all the countries in terms of FDI and witnessed an increase of 10 per cent. Finally, an amount of $49 billion was seen in the global market. As per the report by OECD, there was a contraction in the overall FDI inflow in advanced economies, where FDI fell by 37 % to $378 billion in 2022 compared to a year ago. The reports bring positive news for India as it has become the 3rd largest country to announce new projects globally and 2nd largest in terms of international project finance deals.
As per the World Investment Report in 2023, it was witnessed that the Coronavirus epidemic in 2020 registered a huge decline in FDI and recovery was seen in the year 2021. In 2022, the total global FDI inflow came down to 12 per cent to $1.3 trillion. As India enjoyed a 10 per cent FDI inflow in India, China received an annual increase to 5 per cent and foreign investment torpedoed to Singapore by 8 per cent, while the UAE matched an increase to India’s rate of 10 per cent.
The top FDI inflow titans – Who are they?
In the new world order, who is leading in the FDI game?
The answer comes down to 5 countries. In 2022, the 5 countries that received the highest FDI include China, Hong Kong, Singapore, India and the UAE. About 80 per cent of the investment has come in this sector.
According to reports by the UNCTAD, the biggest reason that India is being showered with FDI is because of the quick developments taking place in India.
Energy Systems – The next biggest FDI generator:
The UNCTAD released its World Investment Report, 2023, and Secretary-General Ms Rebecca Grynspan’s said that investment in sustainable energy systems in developing countries will be a crucial aspect to reaching the world’s climate goals set by the UN by the deadline date i.e.; 2030. It has been mentioned in the report that developing countries, including India, have attracted a whopping FDI of $544 billion in clean energy in 2022 and renewable energy investments of $1.7 trillion annually.
India has set the stage for rapid development and in a few years it’s going to be a spectacle to behold.
We’ll be back with the latest news soon, until then Happy Trading!!
Commodity Samachar
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