India Sees 73% Surge in Foreign Direct Investment in 2022
Significant Growth in FDI
United Nations, Jan 22: Foreign Direct Investment (FDI) in India experienced a remarkable increase of 73% last year, totaling $47 billion, as reported by UNCTAD.
This surge was primarily attributed to substantial investments in sectors such as services, including finance, IT (Information Technology), and R&D (Research and Development), alongside manufacturing, bolstered by policies aimed at integrating India into global supply chains.
India's FDI growth rate ranks among the highest globally.
During the first three quarters of the previous year, investments in data centers in India reached $7 billion, placing the country seventh in terms of data center investments during that timeframe.
In the fourth quarter, FDI in this sector saw a significant uptick, enhancing its dynamism.
In October, Google revealed plans to invest $15 billion in an AI hub located in Andhra Pradesh.
December saw Microsoft announce a $17.5 billion investment in AI, cloud infrastructure, and data centers.
Additionally, Amazon declared a $35 billion investment in AI and other sectors, with these funds expected to be allocated over several years.
On a global scale, FDI rose by 14% last year, reaching $1.6 trillion.
The report indicated that by 2025, data centers are projected to significantly influence the FDI landscape, accounting for one-fifth of global greenfield project values.
With demand driven by AI infrastructure and proprietary digital networks, announced investments in this area surpassed $270 billion.
The semiconductor sector also exhibited robust growth, with newly announced project values increasing by 35%.
However, sectors exposed to tariff risks saw a sharp decline in project numbers, dropping by 25%, particularly affecting textiles, electronics, and machinery.
Globally, developed economies received the majority of FDI flows, with a collective increase of 43%, amounting to $728 billion.
In contrast, developing economies, including India, experienced a 2% decline in FDI, estimated at $877 billion.
UNCTAD noted that for the third consecutive year, FDI in China decreased, falling by 8% to approximately $107.5 billion, with investments concentrated in strategic and high-growth sectors.
Overall, investor sentiment remains weak, with UNCTAD stating, "The message is clear: headline growth overstates the recovery. Policymakers should focus on reviving real investment, not just financial flows."
The report also highlighted a 10% decline in the value of international mergers and acquisitions, alongside a 16% drop in international project finance for the fourth consecutive year, reverting to levels last seen in 2019.
Despite a small number of mega-projects driving high total project values, the number of greenfield project announcements fell by 16%.