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Thursday, February 2, 2023

India receives Rs 5 lakh Crore FDI in 2020, making it the 5th largest FDI recipient globally!

A UN report indicates that India is on track to receive USD 64 billion in Foreign Direct Investment by 2020, making it the fifth-largest recipient worldwide.

India becomes the fifth-largest recipient of foreign direct investment with USD 64 billion.

The report, World Investment Report 2021, by the UN Conference on Trade and Development (UNCTAD), has also stated that there has been a drastic impact on the global FDI flows. They declined by 35 percent in 2020 to USD 1 trillion, USD 1.5 in the trillion the previous year.

The investment projects and prospects of multinational enterprises (MNEs) to reassess new projects have been scaled down due to the investment projects.

As per the report, the FDI has increased by 27 percent to USD 64 billion in 2020, USD 51 billion in 2019. This boost was possible because of the acquisitions in the information and communication technology (ICT) industry, leading the country to be the fifth-largest FDI recipient globally.

The pandemic led to an increased dependency on digital infrastructure and services globally, therefore increasing the demand for the same. This also resulted in an increased value of greenfield FDI project announcements targeting the ICT industry. Reportedly, there has been a 22 percent increase, to USD 81 billion.

Second Wave Of Pandemic Hits India’s Economic Activities

As per the statistics, the second wave of the COVID-19 virus has had a significant impact on the country’s overall economic activities. The major project announcements in the ICT industry also include an investment of USD 2.8 billion by Amazon in ICT infrastructure in India.

The report states, “Yet India’s strong fundamentals suggest optimism for the medium term. FDI to India has been on a long-term growth trajectory, as it continues to attract investors who are looking to take advantage of its substantial market size. In addition, investment into the ICT industry is likely to keep growing.”

The pandemic and the lockdown imposed have severely impacted main investment destinations such as Maharashtra, a state where there are some of the biggest automotive manufacturing clusters (Mumbai-Pune-Nasik-Aurangabad), and Karnataka (home to the Bengaluru tech hub).

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