India’s economy could prove to be the “most resilient” in the subregion of South and South-West Asia more than the extended term, according to a report by the United Nations, which says a positive but reduced financial development post COVID-19 pandemic and the country’s huge marketplace will continue to attract investments.
The report titled ‘Foreign Direct Investment Trends And Outlook In Asia And The Pacific 2020/2021’, and compiled by United Nations Economic and Social Commission for Asia and the Pacific (UNESCAP), stated that inward FDI flows to South and South-West Asia slightly decreased by 2 per cent in 2019, from $ 67 billion in 2018 to $ 66 billion in 2019.
The development, on the other hand, was primarily driven by India, which accounted for 77 per cent of the total inflows to the subregion and received $ 51 billion in 2019, up 20 per cent from the prior year.
The report, released final week, mentioned the majority of these flows had been destined for the Information and Communications Technology (ICT) and the building of sub-sector.
Regarding the ICT sector, the report mentioned the investment to India has evolved from information and facts technologies services for Multinational enterprises (MNEs) to the thriving nearby digital ecosystem exactly where numerous domestic players, particularly in e-commerce, have attracted considerable international investment.
The report added that FDI outflows from South and South-West Asia enhanced for the fourth consecutive year, modestly increasing from USD 14.8 billion in 2018 to $ 15.1 billion in 2019.
The geographical spread of FDI outflows from the subregion remained uneven, with just two nations (India and Turkey) accounting for the vast majority of outflows in 2019, it mentioned.
“As such, the slight increase in outward FDI was predominantly due to an increase in outflows from India, which accounted for 80 per cent of total outward investment from the subregion,” the report mentioned, adding that in 2019, India invested $ 12.1 billion abroad, a 10 per cent raise compared with the prior year.
The report noted that in the quick term, each inflows and outflows from and to the subregion are anticipated to decline.
Further it mentioned, FDI from India is projected to decline in 2020, with the biggest MNEs revising their earnings down by 25 per cent in early 2020 due to the impacts of the pandemic.
“However, India’s economy could prove the most resilient in the subregion over the long term. FDI inflows have been steadily increasing and positive, albeit lower, economic growth after the pandemic and India’s large market will continue to attract market-seeking investment,” the report mentioned.
India’s rapid-increasing telecom and digital space, in unique, could see a quicker rebound as worldwide venture capital firms and technologies businesses continue to show interest in the country’s marketplace via acquisitions, it mentioned.
It noted that Facebook and Google’s investment in Jio Platforms in 2020 worth $ 5.7 billion and $ 4.5 billion respectively had been testaments to this trend.
India has implemented a quantity of noteworthy investment policies and measures due to the fact 2019. Some of them involve the relaxation of limits to FDI in the insurance coverage sector, liberalisation of FDI guidelines which ended equity caps in various sectors like coal and lignite mining, contract manufacturing and single brand retail trading and raise in ceiling for FDI into the defense sector to 74 per cent by way of automatic approval route, it mentioned.