Context:
Foreign Direct Investment (FDI) into India remained unchanged year-on-year in 2024 at $28 billion even as global FDI flows dropped 11 per cent, the United Nations Conference on Trade and Development (UNCTAD) said. In 2023, FDI inflows into India had plummeted 43 per cent in 2023 to $28 billion.
What is FDI?
- Foreign Direct Investment (FDI) plays a crucial role in the global economy, facilitating economic growth, creating jobs, and fostering innovation across borders.
- It refers to an investment made by a firm or individual in one country into business interests located in another country.
- FDI is typically characterized by the investor gaining a significant degree of influence or control over the foreign business, often in the form of acquiring a substantial percentage of its shares, establishing new businesses, or purchasing existing assets.
Key Highlights
- FDI Rankings (2024):
- Top Recipients:
- United States: $279 billion (1st)
- Singapore: $143 billion (2nd)
- Hong Kong (China): $126 billion (3rd)
- China: $116 billion (4th)
- India: $27.6 billion (15th, up from 16th)
- Top Recipients:
- Global Trends:
- FDI fell globally by 11% to $1.5 trillion in 2024.
- The headline increase was due to volatile financial flows rather than sustained real investment.
- India’s Sectoral and Strategic Strengths:
- Greenfield Projects: 1,080 in 2024 — 4th highest in the world.
- International Project Finance: 97 deals — among the top five globally.
- FDI Outflows: India ranked 18th, with $23.8 billion in outward investments.
- Digital Services Leadership:
- India led the Global South in greenfield digital services investment (2020–24) with $54 billion, ahead of Singapore ($12B), Brazil, Malaysia, and China.
UNCTAD Insights
- Manufacturing Shift: India, along with Malaysia and Vietnam, is emerging as a preferred manufacturing hub, aided by industrial policy reforms and global supply chain shifts.
- Digital Economy: Cited as a critical driver of global growth, the digital sector is growing 10–12% annually, outpacing global GDP and becoming central to FDI and value creation.
