India attracted $ 2200 crore of FDI flows in the first half of 2018, according to a UN report which states that the global foreign direct investment dropped by 41% in the same period due to tax reforms carried out by the Trump administration.
The UN Conference on Trade and Development (UNCTAD) said on Monday in its 'Investment Trends Monitor' report that in South Asia, India attracted $ 2200 crore of FDI (foreign direct investment) flows, contributing to the subregion's 13 percent rise in FDI in the first half of the year.
The report, however, said that with the $ 2200 crore FDI, India just about managed to make it to the top 10 host economies receiving the most FDI during the period.
China was the largest recipient of FDI, attracting an estimated $ 7000 crore in inflows in the first half of the year, followed by the UK with $ 6550 crore, the US with $ 4650 crore, The Netherlands at $ 4480 crore, Australia with $ 3610 crore, Singapore got $ 3470 crore and Brazil received $ 2550 crore, it said.
Global foreign direct investment fell by 41 percent in the first half of 2018, to an estimated $ 47000 crore from $ 79400 crore in the same period of 2017, mainly due to large repatriations by the US parent companies of accumulated foreign earnings from their affiliates aboard following tax reforms, the report said.
Overall, the global financial picture is "gloomy", said James Zhan, UNCTAD's Director, Division on Investment and Enterprise.
The decline in global FDI is mainly owing to recent tax reforms implemented by US President Donald Trump's administration that led to big firms in the US to bring home earnings from abroad ? principally from Western European countries.
Other factors have contributed to this year's "huge difference in repatriation" of overseas profits by US multinationals, Zhan said.
These include uncertainty about the detail and impact of tax reform and the potential impact of unresolved international trade disputes; such as the tit-for-tat tariffs imposed by the US and China, Zhan added.
In contrast to the overall decline in foreign investment, the report highlights a 42 percent increase in so-called "greenfield" projects to $ 45400 crore. These initiatives can involve building operations in a foreign country from scratch and they are seen an indicator of future trends, Zhan said, adding that investment in this sector had been at "relatively low levels" in the same period last year.
The report noted that while the fall in foreign direct investment had happened mainly in richer nations, including Ireland (down $8100 crore) and Switzerland (down $7700 crore), developing economies saw FDI flows declining "only slightly" in the first half of the year by four per cent to $ 31000 crore compared with 2017. This includes developing Asia - down four per cent - to $ 22000 crore - in the same period, driven mostly by a 16 percent decline in investment in East Asia.
Latin America and the Caribbean saw a six percent drop in investment, amid uncertainty over upcoming elections that were offset by higher commodity prices, the report said.
Also Read: Global FDI falls 41% in H1 2018 after Trump tax reforms, says UN