India's foreign direct investment (FDI) inflows have seen a sharp decline of 43% in 2023, reaching $28 billion, according to a report by the United Nations Conference on Trade and Development (UNCTAD). This drastic drop has caused India to fall seven places to 15th in the World Investment Ranking.
The decline is part of a global trend, with worldwide FDI falling 2% amidst economic slowdown and geopolitical tensions. While the US maintained its top position, followed by China, India's decline was particularly significant.
Despite this setback, India remains a key destination for greenfield projects and international project finance deals, ranking fourth and second respectively. The country also saw an increase in outward FDI, rising to 20th in the global rankings.
The UNCTAD report attributes the decline to various factors, including the global economic slowdown, geopolitical tensions, and domestic challenges. However, it suggests that modest growth is possible in 2024 due to easing financial conditions and ongoing efforts to facilitate investment.
India's policy initiatives, such as liberalization measures and focus on sustainable finance, are also highlighted in the report. While the immediate outlook remains challenging, these efforts could contribute to a potential rebound in FDI inflows in the future.
| RANK in 2023 | Country | FDI inflows 2022 (Billion dollars) | FDI inflows 2023 (Billion dollars) |
| 1 | US (1) | 332 | 311 |
| 2 | China(2) | 189 | 163 |
| 3 | Singapore (3) | 141 | 160 |
| 4 | Hong Kong, China (4) | 110 | 113 |
| 5 | Brazil (6) | 73 | 66 |
| 6 | Canada (9) | 46 | 50 |
| 7 | France (5) | 76 | 42 |
| 8 | Germany (17) | 27 | 37 |
| 9 | Mexico (12) | 36 | 36 |
| 10 | Spain (10) | 45 | 36 |
| 15 | India (8) | 49 | 28 |
