FDI to India slid 1.8% in 2024, reflecting declining share in capital formation: UN report
A new report by the United Nations (UN) shows how foreign investment is playing a shrinking role in India's development, with foreign direct investment (FDI) inflows making up 2.3% of all capital formation in India in 2024, down from 8.8% in 2020.
The World Investment Report 2025 by the United Nations Conference on Trade and Development, released on Thursday, further shows that the total stock of foreign investment accumulated in India over the years stood at 14% of the country's gross domestic product (GDP) in 2024, down from 17.9% in 2020.
In fact, the data shows that in absolute terms, India attracted $27.6 billion of FDI inflows in 2024, down 1.8% from 2023, and less than half the amount seen in 2020. The report, however, noted that overall capital formation in India from other sources has been robust.
'The United States and India experienced significant growth in manufacturing projects, reaching record levels,' the report said. 'In India, semiconductor and basic metals projects contributed to the rise in manufacturing activity.'
In South Asia, India stood out as the dominant recipient of FDI, accounting for nearly 80% of the region's FDI inflows. In capital expenditure, too, India outshone its neighbourhood significantly.
'India stood out with projected capital expenditures up by more than a quarter to $110 billion, almost a third of the total in Asia,' the report noted.
Cross-border mergers and acquisitions (M&A), too, declined in both developing Asia overall as well as in India. China was the main driver of falling cross-border M&A activity, with deal values falling 49% in 2024.
'The United Arab Emirates and India, in that order, also contributed to the decline, primarily through divestments or sales of assets to local partners,' the report said. 'For example, Walt Disney (United States) partially exited its operations in India through a $3 billion merger of Star India with Viacom 18 Media, creating a joint venture majority owned by Indian firms. Several pharmaceutical operations in India owned by international investors were also sold to local firms.'
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