UNCTAD’s World Investment Report 2024: India’s FDI Inflows Decline by 43%, Drops to 15th Spot in FDI Rankings

The United Nations Conference on Trade and Development (UNCTAD) released its 2024 World Investment Report titled “Investment Facilitation and Digital Government,” revealing a significant decline in India’s Foreign Direct Investment (FDI) inflows. The report indicates that India’s FDI inflows fell by 43% in 2023, dropping from USD 49 billion in 2022 to USD 28 billion in 2023. Consequently, India’s rank among FDI recipients fell from 8th in 2022 to 15th in 2023.

Key Points:

1. FDI Inflows and Rankings:
   1. Current Rank: India is ranked 15th with FDI inflows of USD 28 billion.
   1. Previous Rank: India was ranked 8th in 2022 with FDI inflows of USD 49 billion.
   1. FDI Outflows: India’s rank for FDI outflows improved to 20th in 2023, up from 23rd in 2022.
2. Sectoral Performance:
   1. Greenfield Projects: India retained its position among the top 5 for greenfield projects.
   1. International Project Finance Deals: India continues to hold the 2nd rank in international project finance deals.
   1. Greenfield Project Announcements: India became the 4th largest host economy for greenfield project announcements in 2023, slipping one rank.

Top 5 Host Economies in 2023:

Top 5 Home Economies in 2023:

Global FDI Trends:

1. Overall Decline:
   1. Global FDI: Decreased marginally by 2% to USD 1.3 trillion in 2023.
   1. Developing Countries: FDI flows to developing countries dropped by 7% to USD 867 billion.
   1. Developing Asia: Saw an 8% decrease, with China experiencing a rare decline.
2. Factors Influencing Decline:
   1. Economic Volatility: Increased geopolitical tensions and economic slowdown contributed to the decline.
   1. Cross-Border Mergers and Acquisitions (M&A): Declined by almost USD 30 billion to USD 57 billion in 2023.

Regional Insights:

1. Developing Asia:
   1. FDI Inflows: Fell by 8% to USD 621 billion.
   1. East and Southeast Asia: Continued to be the largest recipients of FDI, accounting for nearly half of global inflows.
2. Investment in SDG-Linked Sectors:
   1. Reduction: Investment in sectors linked to the Sustainable Development Goals (SDGs) was reduced by 10%.
   1. Policy Measures: 86% of investment policy measures in developing economies were favorable to investors in 2023.
3. Digital Investment Facilitation:
   1. Digital Tools: Significant increase in the use of digital tools like online single windows and information portals since 2016.
   1. Growth: In developing countries, the number of such tools quadrupled from 13 to 67; in developed economies, it more than doubled from 12 to 28.

About UNCTAD:

• Purpose: UNCTAD promotes the interests of developing countries in world trade.
• Secretary-General: Rebeca Grynspan (Costa Rica), the first woman to hold the post.
• Headquarters: Geneva, Switzerland
• Founded: December 30, 1964

Conclusion:

The 2024 World Investment Report by UNCTAD highlights the challenges and shifts in global FDI trends, with India experiencing a notable decline in FDI inflows. Despite this, India’s improved ranking in FDI outflows and its strong performance in greenfield projects and international project finance deals underscore its potential for recovery and growth. The report also emphasizes the need for global financial reform and increased digital investment facilitation to support sustainable development goals.