FDI inflows into India to slip as TNCs rework investment plans

Last Updated: Thursday, September 17, 2009 - 23:52

New Delhi: Foreign direct investment in India may erode sharply from the record USD 42 billion in 2008 with trans-national corporations (TNCs) going slow on expansion plans following the global financial meltdown, says an UNCTAD report.

"...as some large TNCs are reconsidering their global
expansion plans in response to the global financial crisis and
economic recession, their investment projects in India may be
affected," United Nations Conference on Trade and Development
(UNCTAD) said in its World Investment Report 2009.

UNCTAD said that the FDI surge in 2008 was owing to TNCs
in many manufacturing and service industries expediting their
market entry and expansion in India.

However, the FDI flows in India has dipped to USD 6,256
million in the first quarter of 2009 from USD 14,197 million
during the same period last year.

According to UNCTAD`s World Investment Report 2009, India
is among the world`s 15 largest FDI recipient in 2008.

UNCTAD also said global Foreign Direct Investment (FDI)
flows will shrink by 30 per cent in 2009 and recover only
marginally during the next year.

Globally, "FDI inflows will fall from about USD 1.7
trillion in 2008 to below USD 1.2 trillion in 2009. Recovery
is expected to be slow in 2010, reaching no more than USD 1.4
trillion, but gathering momentum in 2011 to approach USD 1.8
trillion," UNCTAD said.

The report said that a major contributing factor to the
decline in global FDI flows has been growing divestments
by transnationals worldwide.

However, the strong performance of China and India, even
during the current crisis, has reshaped the landscape of FDI
flows to the region as well as to the world at large, the
report added.

But according to UNCTAD`s World Investment Prospects
Survey 2009-11, India has slipped by one notch to third
position as the most preferred foreign direct investment (FDI)
country.

"These two largest emerging economies (China and India)
ranked numbers one and three, respectively, as the most
preferred FDI locations," the survey had said.

Bureau Report



First Published: Thursday, September 17, 2009 - 23:52

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