Context: Recently, the United Nations Conference on Trade and Development (UNCTAD) released the World Investment Report 2020.
About the Background

• According to the latest World Investment Report 2020 by UNCTAD, India jumped from 12th position in 2018 to 9th position in 2019 among the world’s largest FDI recipients.
• “In South Asia, FDI is also expected to contract sharply. 
• In India, the biggest FDI host in the sub-region, with more than 70% of inward stock, the number of greenfield investment announcements declined by 4% in the first quarter, and M&As contracted by 58%," the UNCTAD report said.

India’s Investment Scenario:

• India jumped from 12th position in 2018 to 9th position in 2019 among the world’s largest FDI recipients.
• In 2019, the FDI inflows into India jumped over 20% to $51 billion.
• The report also observed that FDI into India may decline sharply in 2020 because of the impact of the Covid-19 pandemic and the consequent lockdown measures, supply chain disruptions and economic slowdown.
• In India the number of greenfield investment announcements declined by 4% in the first quarter of financial year 2020-21. The Mergers and acquisitions (M&A) also contracted by 58%.
• A greenfield investment is a type of FDI in which a parent company creates a subsidiary in a different country, building its operations from the ground up.
• However, the report mentioned that India’s large market will continue to attract market-seeking investments to the country.
• India’s professional services and the digital economy could see a faster rebound as global venture capital firms and technology companies continue to show interest in India’s market through acquisitions.
• Investors concluded deals worth over $650 million in the first quarter of 2020, mostly in the digital sector.

Global Scenario:

• According to the report, global FDI flows are forecast to decrease by up to 40% in 2020, from their 2019 value of $1.54 trillion.
• This would bring global FDI below $1 trillion for the first time since 2005. The FDI is projected to decrease by a further 5% to 10% in 2021.
• Developing economies are expected to see the biggest fall in FDI because they rely more on investment in Global Value Chain (GVC) based industries, which have been severely hit due to Covid-19 pandemic.
• They have also not been able to put in place the same economic support measures as developed economies.
• However, the investment flows are expected to slowly recover by the start of 2022.
• Global FDI flows rose modestly in 2019, following the sizable declines registered in 2017 and 2018.
• The rise in FDI was due to the waning of impact of the 2017 tax reforms in the United States.

About World Investment Report

• The World Investment Report focuses on trends in foreign direct investment (FDI) worldwide, at the regional and country levels and emerging measures to improve its contribution to development. 

Every issue of the Report has:

• Analysis of the trends in FDI during the previous year, with especial emphasis on the development implications.
• Ranking of the largest transnational corporations in the world.
• In-depth analysis of a selected topic related to FDI.
• Policy analysis and recommendations.
• Statistical annex with data on FDI flows and stocks at the country level.

About United Nations Conference on Trade and Development (UNCTAD)

• It is the principal organ of the United Nations General Assembly dealing with trade, investment, and development issues.
• HQ – Geneva
• Aims to “maximize the trade, investment and development opportunities of developing countries.”
• It organizes: World Investment Forum

It publishes reports like:

• World Investment Report
• Technology and Innovation Report
• The Least Developed Countries Report
• Information and Economy Report
• Technology and Innovation Report
• Commodities and Development Report

UNCTAD is a permanent intergovernmental body established by the United Nations General Assembly in 1964.