In the last few months, several economists and industrialists have raised question mark on the Indian economy as the growth slowed down in the last two quarters. Several analysts called it a policy paralysis at the centre but despite such negativity, India remains a major foreign direct investment (FDI) destination in the South Asia. In the year 2011, the country attracted $32 billion of FDI into the country, according to the latest report release of UN Conference on Trade and Development (UNCTAD) World Investment Report 2012 on Thursday.

At the global level, India is the third most preferred destination after China and the United States. India accounted for more than four fifths of the region’s FDI in the South Asian region. “The recovery took place mainly as a result of the good performance of India – which is the largest FDI recipient in South Asia and accounts for more than four fifths of total FDI inflows to the region,” said the report sub-titled ‘Towards a New Generation of Investment Policies’.

The FDI outflow from India rose by 12 percent to $15 billion, said the report. “India remained the largest investor in least developed countries (LDCs) from developing and transition economies, followed by China and South Africa,” the report noted. In Africa, Zimbabwe attracted the largest greenfield investment from India.

However, the report talked about the uncertainties due to the global economic situation coming out mainly from Euro zone crisis. It also predicted slower FDI growth in 2012.

The report is based on talking to some 179 global companies - from the manufacturing, services and primary sectors -- between February and May, on their favoured investment destinations for 2012 to 2014.

The report talks about uncertainities gripping the South Asian region while talking about political issues of India. “South Asian countries face different challenges in building a conducive business environment…These challenges include, for instance, stabilisation in Afghanistan, security concerns in the Islamic Republic of Iran and Pakistan, and macroeconomic as well as political issues in India,” the report pointed out.

The report also noted the recent developments such as the improving relationship between India and Pakistan has highlighted new opportunities for both the countries.

The World Investment Report has been published annually since 1991.

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