July 22: India has joined the elite club of top ten destinations of FDI in 2009, according to a report by the United Nations Conference on Trade and Development (UNCTAD). India was the 9th largest recipient of inward FDI last year. There has been a fast rise in India’s position as an attractive destination for foreign investment. India was at the 20th position in 2007, but rose to the 13th slot in 2008.
India’s emergence in the top 10 large FDI recipients shows that it is becoming the centre of global foreign investment picture. India jumped to the 9th position from 13th in 2008, despite a drop in the FDI into the country. This could be attributed to the fact that world over there was a drop in FDI among the larger economies. The country attracted FDI of $34.6 billion in 2009 as compared to $ 40.4 billion in the previous year.
The United States was the largest recipient of FDI in 2009, followed by China, France and Hong Kong. UNCTAD’s The World Investment Report 2010 said that the global FDI flows began to bottom out in the latter half of 2009.
This was followed by a modest recovery in the first half of 2010, sparking some cautious optimism for FDI prospects in the short term. In the longer term, from 2011 to 2012, the recovery in FDI flows is set to gather momentum, said the report. Global inflows are expected to pick up to over $ 1.2 trillion in 2010, rise further to $ 1.3 to $1.5 trillion in 2011.
These FDI prospects are, however, fraught with risks and uncertainties rising from the fragility of the global economic recovery. The report warned that unless private investment regains its leading economic role, the sustainability of the global recovery remains questionable.