India’s foreign direct investment (FDI) inflows increased 17 per cent in 2013 to $28 billion, but macroeconomic uncertainties have remained a major concern for investors, a United Nations report has said.
The opening up of multi-brand retail in 2012 has not generated the desired results, the World Investment Report 2014 released on Tuesday by the United Nations Conference on Trade & Development (UNCTAD) pointed out.
India would prefer the FDI route over the foreign institutional investor (FII) inflows, if overseas resources needed to be generated for economic expansion to its potential level, Finance Secretary Arvind Mayaram said at the launch of the report. The country’s FDI inflow had fallen sharply from $36.19 billion in 2011 to $24.19 billion in 2012.
According to the report, global FDI flows rose by 9 per cent to $1.45 trillion in 2013. The total inflow to developing Asia (excluding West Asia) was $382 billion in 2013, which was 4 per cent higher than 2012.
However, at current levels of investment in the sustainable development of goal-relevant sectors, developing countries face an annual gap of $2.5 trillion. For basic infrastructure, food security, climate change mitigation and adaptation, health and education, estimates for total investment needs in developing countries alone range from $3.3 trillion to $4.5 trillion per year, the report said.
Projections by UNCTAD suggest that global FDI flows will rise to $1.6 trillion in 2014, $1.75 trillion in 2015 and $1.85 trillion in 2016, driven mainly by investments in developed economies. However, fragility in emerging markets, policy uncertainty risks and regional conflict could derail the expected upturn in FDI flows.