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Foreign direct investments (FDI) in India jumped by 10 percent in 2022, even as the flow of overseas investments remained flat in Asia's developing countries during the year, according to the United Nations Conference on Trade and Development (UNCTAD).
The cumulative investment in 'developing Asia' region came in at $662 billion in 2022, which is the same as it stood in 2021, stated the UNCTAD’s World Investment Report 2023 published on July 5.
The "inflows were highly concentrated", the UN agency said, adding that India was among the five economies that accounted for almost 80 percent of the FDI flows to the region. The four other economies were - China, Singapore, Hong Kong and the United Arab Emirates.
"In South Asia, FDI flows to India rose by 10 percent to $49.3 billion as the country became the third-largest host country for greenfield project announcements and the second-largest for international project finance deals," UNCTAD said in a media release. Overseas investments in neighbouring Bangladesh grew by 20 percent to $3.5 billion, it added.
Singapore was the largest recipient of FDI in Southeast Asia region, as it "registered another record, up 8 percent to $141 billion", the agency noted. Flows to Malaysia grew by 39 percent to $17 billion, which is also a new record for the country, it said.
FDI to Vietnam and Indonesia rose by 14 percent and 4 percent, to $18 billion and $22 billion, respectively. FDI to the Philippines fell by 23 percent as a result of several divestments, the report pointed out.
In East Asia, inflows to China rose by 5 percent to $189 billion, mainly in manufacturing and high-tech industries and mostly from European multinational enterprises (MNEs). Flows to Hong Kong fell by 16 percent to $118 billion, it added.
The UAE was the hotspot for foreign investments in West Asia, as the flows increased by 10 percent to $23 billion, "the highest amount ever recorded" by the country, as per the report. FDI in Saudi Arabia declined 59 percent to to $7.9 billion, whereas, it rose by 9 percent to $13 billion.
In Central Asia, flows to Kazakhstan almost doubled to $6.1 billion, mainly in extractive industries. FDI also rose in Uzbekistan, by 11%, to $3 billion, the release added.
Country-wise, China and Hong Kong continue to be the largest investors in Asia, followed by the US, Japan and Singapore, the report said.
While India saw a surge in inward FDI, it also saw growth in the flow of investments made by Indian companies in other countries.
According to the report, greenfield project announcements by Indian multinational enterprises more than tripled to $42 billion.
“Two of the largest greenfield projects were in renewables, with Acme Group announcing a $13 billion plant in Egypt to produce 2.2 billion tonnes of green hydrogen annually and ReNew Power announcing that it will set up a $8 billion green hydrogen plant in the Suez Canal Economic Zone,” the report said.
Acme group and ReNew Power both focus on renewable energy.
FDI up in regional economic blocs
Over the past five years, the flow of foreign investments have increased in all major regional economic groupings in developing Asia, as per the UNCTAD report.
FDI increased by 41 percent to $222 billion in member states of the Association of Southeast Asian Nations (ASEAN), by 42 percent to $580 billion in the countries part of the Regional Comprehensive Economic Partnership (RCEP), by over 100 percent to $37 billion in Gulf Cooperation Council (GCC) states and by 20 percent to $56 billion to South Asian Association for Regional Cooperation (SAARC) nations.
India, notably, is a core member of the 7-member SAARC, and a sectoral dialogue partner of the ASEAN grouping, which comprises of the Southeast and East Asian countries.
The UNCTAD report also noted that in 2022, the share of intraregional greenfield project announcements rose to 24 percent of all projects announced in developing Asia, compared with 21 percent in 2017.
"Across developing Asia, investment in sectors relevant for the achievement of the Sustainable Development Goals rose," the agency noted.
"The number of announced greenfield project numbers in these sectors grew by 32 percent, to 921, primarily because of strong interest in renewables, transport services and telecommunication. The number of international project finance deals rose moderately, by 6 percent," it said.
FDI in India rises 10%, remains flat in overall 'developing Asia' region in 2022: UNCTAD
India was among the five economies that accounted for almost 80 percent of the FDI flows to the region, as per the World Investment Report 2023 released by the UN agency.
