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  • InduQin

Inbound India Investment Flows: Recent Performance and 2022 Trends

India has been positioning itself as a favored destination to attract foreign direct investment in recent years and enjoyed strong global foreign direct investment (FDI) flows as FDI rebounded in 2021, up 77% to an estimated US$1.65 trillion, from US$929 billion in 2020, surpassing their pre-COVID-19 level.


However, there have been exceptions in the origins of investment capital entering the country. As recently as 2019, Chinese investors provided US$3-4 billion dollars of growth capital to young India-based tech firms. This flow was completely stopped during 2020 following Indian Government security concerns, and only began to slightly reopen in 2021 – mostly to Chinese funds, which were already in India-based vehicles, and then only in minority positions. There were four India-based investments involving Chinese investors during Q4 2021 – all were tech/TMT/ e-commerce. In three of these investments, China-based investors invested US$6 million or less. The largest investment by a single Chinese company was US$19 million as part of a US$115 million AdTech capital raise.

India, however, has been much more prepared to deal with Chinese investments via its multilateral policy banks, both of which include significant Indian shareholding. India is the second largest equity holder (after China) in the Asian Infrastructure Investment Bank (AIIB) and has a 19.42% equity stake in the BRICS New Development Bank (NDB) on par with China. India received three major investments from these sources in Q4 2021 (see below).

Gujarat Education

AIIB funding US$250 million out of a US$1.07 billion PC (World Bank-led) education program in December, implementing comprehensive reforms in this sector, based on a decentralized stakeholder-owned planning and management approach. This will upgrade the physical learning environment as well as digital infrastructure of participating schools. The investments also finance soft activities, which will ensure the efficiency of the upgraded school infrastructure to bring the intended educational outcomes.


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