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INDIA RISES TO 15TH POSITION IN FDI DESTINATIONS

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INDIA RISES TO 15TH POSITION IN FDI DESTINATIONS

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Released: June 19, 2025 |

Published by: United Nations Conference on Trade and Development (UNCTAD)

INDIA’S FDI PERFORMANCE

Global Ranking

  • In 2024, India rose to the 15th position globally for FDI inflows, improving from 16th in 2023.
  • This rise occurred despite an 11% decline in global FDI flows, marking India as a stable destination for foreign investment.

FDI Inflows and Trends

  • India maintained $28 billion in FDI inflows in 2024, the same level as 2023.
  • This stability is considered a positive sign after a significant 43% drop in 2023 from the previous year.

OTHER FDI METRICS

  • According to the Reserve Bank of India (RBI), net FDI (excluding repatriation) stood at approximately $29 billion for FY25.
  • Data from the Department for Promotion of Industry and Internal Trade (DPIIT) indicated FDI equity inflows of $50 billion, representing a 13% increase in FY25.

India’s Standing in Developing Asia

  • India attracted 46% of all international private equity investment in developing Asia, making it the leading recipient in the region.

INVESTMENT CATEGORIES

Greenfield Projects

  • India retained its 4th position globally for greenfield project announcements.
  • In 2024, a total of 1,080 greenfield projects were announced.
  • The projected capital expenditure surged over 25%, reaching $110 billion—almost one-third of Asia’s total greenfield investments.
  • This growth reflects strong long-term industrial investment interest in India.

International Project Finance (IPF)

  • India ranked among the top five countries for IPF deals, with 97 transactions.
  • However, India slipped from its 2nd place ranking in 2023.

OUTWARD FDI

  • India improved its position in outward investments, ranking 18th globally in 2024.
  • Outward FDI flows reached $24 billion, up from 23rd position and lower volumes in 2023.

KEY SECTORS ATTRACTING INVESTMENT

  1. Renewable Energy
  2. Semiconductors
  3. Basic Metals
  4. Digital Infrastructure
  • Notably, Microsoft committed $3 billion to build out cloud and AI infrastructure in India.
  • The report also highlighted M&A activity, such as:
    • Walt Disney’s $3 billion merger with Viacom18, forming a majority Indian-owned joint venture.
    • International pharmaceutical operations being sold to Indian companies.

GLOBAL FDI CONTEXT

Global Trends

  • Global FDI dropped by 11% in 2024, marking the second consecutive year of decline.
  • This decline excludes volatile conduit flows through select European countries.
  • The outlook for 2025 remains pessimistic due to geopolitical tensions and economic uncertainty.

TOP FDI DESTINATION COUNTRIES

Rank Country FDI Inflows
1 United States $279 billion
2 Singapore (Moved up)
3 Hong Kong (Moved up)
4 China $116 billion (29% decline)

Regional Patterns

  • Africa: FDI rose by 75%, largely driven by a megaproject in Egypt.
  • Developing Asia: Received $605 billion in FDI (a slight 3% decline).
  • ASEAN (Southeast Asia): FDI grew by 10%, defying global trends.

FDI IN SUSTAINABLE DEVELOPMENT GOALS

  • Investment in SDG-related sectors fell sharply in 2024:
    • Infrastructure, renewable energy, water/sanitation, agrifood: Down 25–33%.
    • Only the health sector saw modest growth (from a low base).
  • International Project Finance (IPF) fell 26% globally, severely affecting Least Developed Countries (LDCs).

DIGITAL ECONOMY INVESTMENTS

  • FDI into the digital economy increased by 14% in 2024.
  • However, 80% of greenfield digital projects in the Global South were concentrated in just 10 countries, including India.
  • This highlights an uneven distribution of digital investment across developing nations.

WHAT IS FDI?

Foreign Direct Investment (FDI) refers to an investment made by a person or company based in one country into a business or asset located in another country. Unlike portfolio investment (such as buying stocks or bonds), FDI involves significant ownership, control, or influence over the foreign business.

KEY FEATURES

  • Long-Term Interest: FDI implies a lasting interest in the foreign enterprise, not just a short-term financial investment.
  • Ownership or Control: It usually involves acquiring at least 10% of the equity in a foreign company, giving the investor some control over management decisions.
  • Active Participation: The investor often participates in the decision-making and operations of the foreign business.

TYPES OF FDI

Type Description
Greenfield FDI Establishing a new business or facility in a foreign country (e.g., factory, office).
Brownfield/ M&A Acquiring or merging with an existing foreign company.
Joint Ventures Partnering with a local company to operate a business together.

Examples

  • Amazon investing in warehouse infrastructure in India (Greenfield FDI).
  • Tata Motors acquiring Jaguar Land Rover in the UK (Brownfield/M&A).
  • Toyota forming a joint venture with Kirloskar Group in India.

BENEFITS & RISKS

  • Brings in capital, technology, and expertise.
  • Creates employment and boosts infrastructure.
  • Increases exports and integrates the local economy into global supply chains.

Risks and Concerns

  • Can lead to foreign dominance in key sectors.
  • Potential for profit repatriation, where profits are sent back to the investor’s home country.
  • Risk of exploitation of natural resources or local labor.

FDI IN INDIA

India receives FDI across multiple sectors including:

  • Information Technology
  • Telecommunications
  • Pharmaceuticals
  • Renewable Energy
  • Retail and E-commerce

The Indian government regulates FDI through policies published by the Department for Promotion of Industry and Internal Trade (DPIIT). Some sectors allow 100% FDI through the automatic route, while others require government approval.

 

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