The Impact of Covid-19 Pandemic on FDI Flows in India: A Study

Abstract

The Covid-19 epidemic has not only affected global economic activity but also disrupted foreign investment. According to the United Nations Conference on Trade and Development's (UNCTD) World Investment Report 2021, global FDI flows dropped from $ 1.5 million to $ 1 million (35%) in 2019, by about 20 percent less of 2009 after the global financial crisis. The impact on the developing economy was a moderate decline of 8 percent due to the smooth pace of FDI inflow into Asia. It has led to the development of the share of developing economies from just under half in 2019 to two-thirds of the global FDI. FDI inflows into India were $ 54,927 million in 2020-21 compared to $ 56,006 million in 2019-2020 according to data from the Reserve Bank of India (RBI). The increase in FDI flows in India is driven by slow integration and acquisition work. Sectors such as Computer Services, Transport, Digital Education, Fintech, Energy and Infrastructure have attracted investment during the violence. However, India needs to gain confidence in production and needs a lot of foreign exchange. Provincial governments and central government policies aim to assist foreign investors through various incentives and compensation.