India slips in FDI ranking

India has dropped to third place in global foreign direct investments (FDI) this year following the economic meltdown, but will continue to remain among the top five attractive destinations for international investors during the next two years, says Unctad (United Nations Conference on Trade and Development) in a new report on world investment prospects.

Last year, India was ranked second in global FDI flows after China. While China continues in the top place, the US climbed up to second place this year, thanks to a surge in investments by Chinese and Indian companies, who acquired several sick American firms.

However, overall FDI prospects for India remain buoyant, says James Zhan, a senior Unctad official and one of the authors of the latest report. “India will remain among the top five destinations,” said Zhan, suggesting that the Bric countries will hog most of the investment flows once FDI growth starts picking up after 2010.

The report titled, ‘World Investment Prospects Survey 2009-2011’ has listed FDI prospects by industry, particularly the “business-cycle-sensitive” industries such as automotives and other transport materials, metal and non-metal products and chemicals. It also spells out FDI prospects by host region.

Expressing sharp concern over rising “investment protectionism”, with economic stimulus packages contributing to “smart” protectionism, it has underscored the need to keep markets open to attract FDI in the coming years.

With the global economic and financial crisis having wreaked havoc on FDI plans of multinational companies, Unctad expects gradual recovery from next year.