According to the World Investment Report 2019 by the United Nations Conference on Trade and Development (UNCTAD), India secured foreign direct investments (FDIs) worth USD 42 billion in 2018. More remarkably, over three-quarters (77%) of all FDIs that flowed into the South Asian region were to India. Despite a global decline in FDIs in 2018, the inflow to South Asia increased marginally, largely due to the substantial investment funneled into India.
Global FDI Trend
The global FDI faced a decrease by 13% in 2018, falling from $1.5 trillion in 2017 to $1.3 trillion. This represented a third consecutive yearly decline. In contrast, South Asia saw an uptick in its FDI intake. There was a rise of 3.5% bringing the total inflows to $54 billion. The increase in FDI in this region could largely be attributed to growing investment into India.
Investment in India
India’s FDI rose by 6% to USD 42 billion. This increase was primarily driven by strong inflows in sectors such as manufacturing, communication, financial services along with cross-border merger and acquisition activities. However, India’s position as a source country for FDI dropped slightly to the 10th position, after being outranked by Spain.
FDI in Other South Asian Countries
Other countries in the South Asian region also witnessed varying FDI flows. Both Bangladesh and Sri Lanka saw record FDIs of USD 3.6 billion and USD 1.6 billion, respectively. On the other hand, Pakistan experienced a decline in its FDI by 27%, amounting to USD 2.4 billion.
Special Economic Zones (SEZs)
Out of the 5,400 SEZs worldwide, more than 4,000 are located in developing Asian countries, with China hosting the majority of them (2,543). Following China are the Philippines (528), India (373), Turkey (102), and Thailand (74).
| Country | No. of SEZs |
|---|---|
| China | 2,543 |
| Philippines | 528 |
| India | 373 |
| Turkey | 102 |
| Thailand | 74 |
India’s Recent Liberalization Efforts
India has recently relaxed its rules for inward investment in several industries. These include single-brand retail trading, airlines, and power exchanges, which are anticipated to further boost FDI inflow.
About UNCTAD
UNCTAD, established by the United Nations General Assembly in 1964, operates as a permanent intergovernmental body. Based in Geneva, Switzerland, and part of the UN Secretariat, UNCTAD assists developing countries in benefiting more fairly and effectively from the globalized economy.