Flows to India declined to $45 bn in 2021. However, a flurry of new international project finance deals were announced in the country. In its latest World Investment Report UNCTAD said that FDI inflows to India declined to $45 billion in 2021 from $64 billion in the preceding year. While the United States remained the top recipient of FDI, China and Hong Kong also retained second and third position, respectively.

Among the top 10 host economies for FDI, only India saw a decline in its FDI inflows. However, outward FDI from India rose 43 percent to $15.5 billion in 2021. UNCTAD said global FDI flows recovered to pre-pandemic levels last year growing 64 per cent to $1.6 trillion, but the prospects for this year are grimmer.

This year, the business and investment climate has changed dramatically as the war in Ukraine results in a triple crisis of high food and fuel prices and tighter financing. Other factors clouding the FDI horizon include renewed pandemic impacts, the likelihood of more interest rate rises in major economies, negative sentiment in financial markets and a potential recession. UNCTAD foresees that the growth momentum of 2021 cannot be sustained and that global FDI flows in 2022 will likely move on a downward trajectory, at best remaining flat. However, even if flows should remain relatively stable in value terms, new project activity is likely to suffer more from investor uncertainty.

Other corroborative evidence of diminishing foreign investor interest was provided last December by Union commerce minister, Piyush Goyal, on the floor of Parliament. Between 2014 and November 2021, as many as 2,783 foreign companies with registered offices or subsidiaries in India closed down operations with a total of 12,458 active foreign subsidiaries operating in the country.

The exit of one-fifth of foreign companies is indeed a huge number. To be sure, there are various reasons for this such as completion of business objectives an.