Mergers and acquisitions (M&A), particularly in the technology space, made India the fifth largest foreign direct investment (FDI) recipient in 2020, despite a 19 percent fall in funds flowing into greenfield projects coming up in the country, latest data released by UNCTAD showed.

The most recent showed that India’s FDI rose 25 percent to $64 billion in a year when global investment flows shrank 35 percent to $1 trillion. India, China and Hong Kong were among the countries which saw a rise in 2020.

For the current year, the UN agency had a mixed outlook for India, which was the eighth largest FDI destination in 2019, due to the uncertainty caused by the second wave. It suggested investment in new ventures could be hit, but the production-linked incentive scheme(PLI) and high-tech sectors could help drive a rebound.

“India’s strong fundamentals provide optimism for the medium term. FDI to India has been on a long-term growth trend and its market size will continue to attract market-seeking investments,” the report said.

In 2020, cross-border M&As surged 83 percent to $27 billion. In contrast, FDI in greenfield ventures was down 19 percent to $24 billion. Apart from pandemic-driven investment resulting in inflows of around $1.8 billion from Amazon, investments in Jio Platforms, and those by Brookfield and GIC in telecom towers, and Unilever’s merger with GSK contributed to large amounts of inflows.

“Investment is about trust, about opportunity and about return on capital. There are a significant number of companies looking to relocate to India. The very encouraging response to the recent PLI initiatives bears testimony to global business perception of a promising new India,” says Deepak Bagla, who leads Invest India, the country’s investment promotion agency.