On June 19, 2025, the World Investment Report for 2025 was released by the United Nations Conference on Trade and Development (UNCTAD), highlighting a negative outlook due to trade tensions, geopolitical issues, and economic volatility.
This has led to a decline in Foreign Direct Investment (FDI) prospects, impacting GDP growth, capital formation, trade flows, financial stability, and investor confidence.
Global investment trends
The World Investment Report 2025, launched by Secretary-General Rebeca Grynspan, highlights a concerning trend where foreign direct investment (FDI) is decreasing in countries and sectors that need it the most.
Productive FDI declined by 11 percent in 2024, marking the second year of decline. This decline is not just a temporary setback, but a consistent pattern, according to Grynspan.
The report revealed a significant drop in productive FDI by 11 percent in 2024, marking a concerning trend.
The US remains a top source and destination for FDI, with Asian economies also prominent in FDI outflows.
Foreign Direct Investment – Top 10 Destination Economies | ||
Rank | Economies/ Countries | Billions in Dollars |
1 | United States | 279 |
2 | Singapore | 143 |
3 | Hong Kong SAR, China | 126 |
4 | China | 116 |
5 | Luxembourg | 106 |
6 | Canada | 64 |
7 | Brazil | 59 |
8 | Australia | 53 |
9 | Egypt | 47 |
10 | United Arab Emirates | 46 |
Source:UN Trade based on Information from The Financial Times, fDI markets – Authour converted image to Table
Key sectors such as renewable energy, water, sanitation, and agrifood systems have seen declines, hindering development efforts.
Investment in key sectors such as renewable energy has dropped by 31 percent, water and sanitation by 30 percent, and agrifood systems by 19 percent. Health investment has increased by nearly 20 percent, but the global total is still below $15 billion.
These shortfalls are hindering progress in critical areas, highlighting the need for urgent action to ensure sustainable development for all.
Developing Asia attracted $605 billion in FDI in 2024, but faces challenges like declining infrastructure investment and policy uncertainty.
India’s position
India ranked 15 globally for FDI inflows in 2024, with $27.6 billion, and fourth in Greenfield project announcements with 1,080 projects unveild in 2024. The country also saw growth in international project finance deals and outward investments.
India’s 97 international project finance deals placed it among the top five global economies.
With $24 billion in outward foreign investment, the country climbed to 18th place globally in FDI outflows. There was an improvement in the rankings for both India and Saudi Arabia.
The US and India led in greenfield activities in sectors such as semiconductors and automobiles, with new battery and electric vehicle projects announced globally.
The report ends with recommendations for channelling capital to areas in need by implementing reforms in global financial systems, expanding the use of blended finance, and adopting investment regulations that promote digital and clean transitions.
Conclusion
The Government of India’s policies have played a key role in making the economy one of the fastest-growing in the world and a top destination for Foreign Direct Investment (FDI). Despite global economic challenges and changing supply chains, India’s stability and investment potential remain robust.
India’s consistent implementation of policies and clear vision have attracted significant FDI over the past decade, showcasing confidence in the country’s institutions, skilled workforce, and future prospects.
