India soon to be third largest FDI destination: UNCTAD

The United Nations Conference on Trade and Development (UNCTAD) on Thursday said India would emerge as the third largest recipient of foreign direct investment (FDI) for the three-year period ending 2012.

''If the situation continues to improve, India is likely to be among the most promising investor-home countries in 2010-12 as well as the third highest economy for FDI in 2010-12,'' UNCTAD said in its annual World Investment Report for 2010.

India broke into the top 10 destinations for FDI for the first time in 2009, when the world battled to emerge from a brutal financial crisis and FDI flows slowed dramatically. The country rose to the ninth place in 2009 from 13th in the previous year in the list of FDI destinations, according to the UNCTAD report.

According to the report, global FDI inflows declined 37 per cent in 2009, while inflows into India dropped by a much smaller 14 per cent.

Global flows of foreign direct investment will start to recover this year and reach close to their previous peak in 2012, UNCTAD said. Total inflows will likely rise modestly to $1.2 trillion this year from $1.1 trillion in 2009, before increasing to between $1.3 and $1.5 trillion next year and between $1.6 trillion and $2 trillion in 2012.

Increasing intra-regional FDI has become an effective vehicle for industrial upgrading in the South Asia region, providing opportunities to countries at different stages of development, UNCTAD said, and noted that ''inflows from developed countries contracted the most, while intraregional FDI gained ground.''