Inbound India Investment Flows: Recent Performance and 2022 Trends

Posted by Reading Time: 4 minutes

India is still facing West while RCEP and Asia continue to wait for engagement. 

By Asia Investment Research

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. 

Tamil Nadu Urban Services

AIIB funded US$150 million out of US$701 million PC in November 2021. The program is envisioned as a first phase engagement and a building block for AIIB’s long-term partnership by supporting the government’s program of expenditures. As a subset of the overall government scheme, the program supported by this financing will cover core urban services, including water resource management, water supply and sewerage, urban mobility, solid waste management, and public health. 

This article has been extracted from the February issue of Asia Investment Research, to be released on Thursday, February 17. The issue contains unique data concerning Q4 Asian inbound investment flows and includes intelligence concerning Australia, Bangladesh, China, Hong Kong, India, Indonesia, Japan, Laos, Malaysia, Oman, Pakistan, Philippines, Singapore, South Korea, Sri Lanka, Taiwan, Thailand, Turkey, and Vietnam. To reserve your early bird discounted copy for just US$100, please click here. Offer valid until closing of business, Wednesday, February 16.

India – Himachal Pradesh Rural Water Supply Well

NDB funded US$80million of the US$100 million PC Himachal Pradesh rural water supply, which lacks sustainable infrastructure. Around 42% of the state population have limited access to clean drinking water. This non-availability of reliable water supply also causes the rural population to spend up to 2 hours for water fetching and storing related activities. The project will construct 24 rural water supply schemes to provide drinking water to 1,255 villages covering eight districts in Himachal Pradesh.


Pakistan and Bangladesh

Pakistan more than doubled in inbound investment amounts in 2021, including many new Western investors. Bangladesh has over the past year attracted significant overseas investment interest with a view to getting local assets placed on the Dhaka Stock Exchange. There are more details of these investments and the projects involved in the current issue of Asia Investment Research – see the box above. 

At present, investment flows into Asia have been largely influenced by the Regional Comprehensive Economic Partnership (RCEP) free trade agreement, which India was invited to join but opted out of in 2019. Despite the loss of the RCEP deal, India is proceeding with a number of Free Trade Agreements, not least with the Eurasian Economic Union, increase trade with the Central Asian states and make improvements to existing agreements with ASEAN. 

Thus far, India has proven adept at attracting FDI, yet changes are afoot. Quite how long the Indian Government can manage to hold China at bay while banning Chinese-made digital equipment and apps and discourage Chinese investment, while at the same time take advantage of its policy bank ties remains to be seen. A disconnect between Government and the pro-China business and investment lobby appears to be developing, and this will widen if India continues to ignore the opportunities presented by RCEP. Whether that matters at present with India enjoying closer ties with Australia, the EU, United Kingdom, and the United States is a moot point, and India is negotiating deals with all. However – a potential Asian division is there amidst uncertainty about the full extent of India’s eastern investment policies.  

For investment assistance into India, please contact

Related Reading

About Us 

Henry Tillman is the Chairman of China Investment ResearchChris Devonshire-Ellis is the Chairman of Dezan Shira & AssociatesTheir Joint Venture publication, Asia Investment Research, can be accessed here and enquiries sent to