Foreign direct investment inflows to India increased by about 26 per cent to $35 billion in 2014, despite macroeconomic uncertainties and financial risks, according to a United Nations report on global investments.

Global FDI inflows, however, declined by 8 per cent to $1.26 trillion due to fragility of the global economy, policy uncertainty and geopolitical risks, the latest 'Global Investment Monitor’ report released by United Nations Conference on Trade and Development on Thursday said.

China became the largest recipient of FDI in the world in 2014 with inflows of $128 billion (3 per cent growth), which was nearly four times more than India.

The United States fell to the third largest host country with FDI inflows of $86 billion, which was almost a third of their 2013 level, the report said.

“Flows were heavily influenced by economic uncertainty and geopolitical risks including regional conflicts, and by the $ 130 billion mega-buy-back of shares by Verizon (the US) from Vodafone (the UK) which significantly reduced the equity component of FDI inflows to the US,” the report said.

Interestingly, among the top five FDI recipients in the world, four are developing economies which include Hong Kong ($111 billion), Singapore ($ 81 billion) and Brazil ($62 billion).

For 2015, the report said that trends in global FDI flows were uncertain. “The fragility of the world economy, with growth tempered by hesitant consumer demand, volatility in currency markets and geopolitical instability will act as a deterrent for investors,” it said.

Commodity prices

Decline in commodity prices will also lower investments in the oil and gas and other commodity industries.

On the positive side, the report said that stronger economic growth in the US, the demand boosting effect of lower oil prices and proactive monetary policy in the Euro Zone could support increased FDI.

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