India will race longer in South and Southwest Asia, will develop more than other countries
A recent United Nations (UN) report said that the Indian economy is expected to show the highest growth in the long term in South and Southwest Asia. It will continue to attract investment due to positive but low growth following the coronavirus epidemic and the country’s huge market. Inward FDI flows in South and Southwest Asia declined by 2% to 66% in 2019, according to a report prepared by the UN Economic and Social Commission for Asia and Pacific (UNESCAP) – Foreign Direct Investment Trends and Outlook in Asia and the Pacific 2020/2021 Billion dollars, which was $67 billion in 2018.
According to the report, during this period, India got 77% of the total FDI inflow of the region. India achieved FDI of $51 billion during this period, which is 20% higher than in 2018. According to this report, last week, FDI Information and Communication Technology (ICT) and allied sectors got the most.
FDI outflow from South and Southwest Asia increased for a fourth consecutive year
The report said that FDI outflow from South and South-West Asia increased for the fourth consecutive year. It increased from $14.8 billion in 2018 to $15.1 billion in 2019. This increase was mainly due to increased outflow from India. India contributed 80 percent of the total FDI outflows in the region. India invested $12.1 billion abroad in 2019, a 10 percent increase over 2018. However, in the near term, both FDI inflows and outflows of the sector may decline.
India got 87% of the total greenfield inflow of the region in the first three quarters of this year
In the first three quarters of this year, Greenfield FDI Inflow declined 43 percent year-on-year. This suggests that the trend of growth in this sector has reversed. India accounted for 87 percent of the total greenfield inflow in the region. However, India’s greenfield inflow declined by 29 percent on a year-on-year basis. The report says that the Indian economy will remain the most resilient in the region in the long term. After the epidemic, FDI inflow of India may be increasing slightly but steadily. India’s huge market will continue to attract investment even further.
India’s telecom and especially the digital sector can grow rapidly
India’s telecom, and especially the digital sector, may witness rapid growth, as global venture capital companies and technology companies are showing interest in the Indian market through acquisitions. This year, Facebook has invested $5.7 billion and Google has $4.5 billion in the Jio platform. According to estimates, by 2025, the size of core digital sectors such as IT and business process management, digital communication services and electronics manufacturing is expected to double. Also, due to the epidemic, digitalization is increasing in many sectors like agriculture, education, energy, financial services and logistics.
Investment in pharmaceutical manufacturing of the region will come down in the near term
Investment in pharmaceutical manufacturing in the region will decline in the near term, as supply chains in the pharma sector during the epidemic may cause some companies in Europe and the US to adopt local sourcing to some extent. Due to this, the pharma manufacturing hub of this region and especially in India will be affected. The report also said that Asia-Pacific’s contribution to global FDI inflows fell from 45 percent in 2018 to 35 percent in 2019. At the same time, Asia-Pacific’s contribution to global FDI outflows fell from 52 percent to 41 percent during this period.