Foreign Direct Investment (FDI) into India increased by 6 per cent to $42 billion in 2018 with strong inflows in manufacturing, communication, financial services and cross-border merger and acquisition activities making it the sub-region’s largest recipient, according to a UN report on world investment flows.

India ranks 10th amongst the top recipients of FDI in 2018, a notch down from last year, according to the report.

Global FDI flows, however, fell 13 per cent in 2018 to $1.3 trillion, from $1.5 trillion in the previous year – the third consecutive annual decline, according to UNCTAD’s World Investment Report 2019 released on Wednesday

The contraction was largely due to American multinational enterprises (MNEs) repatriating earnings from abroad, making use of tax reforms introduced by the country in 2017. “FDI continues to be trapped, confined to post-crisis lows. This does not bode well for the international community’s promise to tackle urgent global challenges, such as abject poverty and the climate crisis ,” UNCTAD Secretary-General Mukhisa Kituyi said.

“Geopolitics and trade tensions risk continue to weigh on FDI in 2019 and beyond,” he added.

FDI inflows to developing countries in Asia rose by 3.9 per cent to $ 512 billion in 2018. “Growth occurred mainly in China, Hong Kong (China), Singapore, Indonesia and other countries that belong to the Association of South-east Asian Nations, as well as India and Turkey,” the report stated.

The tax-driven fall in FDI, which occurred in the first two quarters, was cushioned by increased transaction activity in the second half of 2018. Despite the FDI decline, the US remained the largest recipient of FDI, followed by China, Hong Kong (China) and Singapore.

In terms of outward investors, Japan became the largest followed by China and France.

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