ndia benefiting from growing interest from multinationals, says United Nations report

India is benefiting from growing interest from multinationals, which see it as an alternative manufacturing base in the context of developed economies’ supply chain diversification strategies, a flagship report by the UN has said, underlining that investment in the country remains strong.

The ‘2024 Financing for Sustainable Development Report: Financing for Development at a Crossroads (FSDR 2024)’ launched Tuesday said that urgent steps are needed to mobilise financing at scale to close the development financing gap, now estimated at 4.2 trillion dollars annually, up from 2.5 trillion dollars before the COVID-19 pandemic. underlining that investment in the country remains strong.

Meanwhile, rising geopolitical tensions, climate disasters and a global cost-of-living crisis have hit billions of people, battering progress on healthcare, education, and other development targets. The report said that investment is expected to remain subdued globally.

“In contrast, investment in South Asia, particularly in India, remains strong. India is benefiting from growing interest from multinationals, which see the country as an alternative manufacturing base in the context of developed economies’ supply chain diversification strategies,” it said, in an apparent reference to China.

The report noted that prospects in most developing countries are also weak due to softer external demand, volatile commodity prices, high borrowing costs and fiscal consolidation pressures. “High levels of debt amid subdued growth continue to constrain fiscal space, making it harder for governments to borrow and invest. Conflicts hamper investment in parts of Africa and Western Asia,” it said.

“In the early 2000s, the global economy experienced a period of significant expansion driven by globalisation, advancements in technology and robust economic growth in large developing countries, notably China and India,” the report said, adding that the rise in global demand during this period fuelled a commodity boom. Global trade activities were also buoyed by the proliferation of global value chains as well as key milestones in trade liberalisation, including China’s accession to the World Trade Organisation (WTO) in 2001 as well as the earlier formation of the European Union in 1995.

“Against this backdrop, global FDI flows grew rapidly. This strong performance came to a halt in 2008. Developed economies were hit hard by the 2008 world financial and economic crisis, which caused severe recessions and massive job losses,” the report said. PTI