The United Nations Conference on Trade and Development (UNCTAD) released its World Investment Report 2025, highlighting global trends in Foreign Direct Investment (FDI) for the years 2023 and 2024.

Key Highlights

Challenges

• The global economy is under pressure from geopolitical conflicts (Ukraine, Middle East), tight financial conditions, and US policy uncertainty.
• Rising debt, sluggish GDP growth, and structural changes in trade and investment are compounding global instability.

Global outlook

• Global FDI fell 11% in 2024, marking a second year of decline.
• 2025 outlook remains negative, due to sustained geopolitical and investor uncertainty.
• US remains top FDI destination, with $279 billion in inflows in 2024.

Uneven Distribution of FDI

• Developing Asia: FDI fell by 3%  growth uncertainity; China saw a big drop of 29%.
• Southeast Asia (ASEAN): Was a bright spot, getting $225 billion, up 10%.
• North America: FDI went up 23%, helped by company mergers.
• Africa: Got $97 billion, a 75% rise — the highest ever.
• Europe saw a sharp decline in FDI inflows. 
• Just 10 developing countries received 75% of total FDI inflows in this group, showing high concentration.

Digital economy investment is the only growth sector

• Tech firms now contribute over 20% of revenues among the Top 100 Multinational Enterprises (MNEs), underlining the digital pivot.
• Sustainable Development Goal (SDG) sectors in developing countries saw investment drop by 25–33%.

International Project Finance (IPF) Slump

• The value of IPF fell over 40% between 2021–2024, severely limiting financing for development projects.
• Least Developed Countries (LDCs) were disproportionately affected due to greater reliance on international finance.

Investment Trends

• Declining Sectors:
  • Infrastructure (-35%)
  • Renewable energy (-31%)
  • Water & sanitation (-30%)
  • Agrifood (-19%)
• Growing Sectors:
• • Semiconductors (+140%)
  • Digital economy (+107%)
  • Health & education (+25%)
• Greenfield investment projects rose 3%
• Cross-border mergers and acquisitions increased by 14%

India Outlook

• India received $28 billion in FDI in 2024, maintaining the same level as 2023.
• Despite the stagnation, India moved up to 15th place globally (from 16th in 2023).
• Global FDI flows declined 11%, but India held steady.
• FDI Equity Inflows in FY25 reached $50 billion, a 13% increase, according to DPIIT.
• Net FDI (excluding repatriation) stood at $29 billion in FY25 (RBI data). 

Greenfield and Project Finance Activity

• India ranked 4th globally in greenfield project announcements (unchanged from 2023).
• Projected capital expenditure surged over 25%, reaching $110 billion, nearly a third of all Asian greenfield investment.
• Slipped from 2nd to 5th position in International Project Finance (IPF) deals, registering 97 projects in 2024.

Sectoral Trends

• India remains a top destination for industrial investments, with less traction in large-scale infrastructure (IPF) compared to prior years.
• Microsoft’s $3 billion commitment to expand Cloud and AI infrastructure.
• Walt Disney’s exit via a $3 billion merger of Star India with Viacom18.
• Sale of several international pharma assets in India to domestic firms.
• India’s Role in Developing Asia: India emerged as the top FDI recipient in Asia in terms of capital expenditures.
• Along with Brazil and Chile, India hosts 30%+ of all international projects in developing economies.

DOWNLOAD PDF