India Sees Slump in Greenfield Projects in Manufacturing: UNCTAD
This downward trend in the primary sector was observed across all developing regions: project values in Africa dropped by 76 per cent, in Latin America and the Caribbean by 56 per cent, and in developing Asia by 35 per cent.
Chennai: As global Foreign Direct Investment fell 3 per cent in the first half of 2025, the greenfield projects in manufacturing in developing countries, which faced high US tariffs, including India, saw the highest decline, finds the UN's trade and development body.
Global foreign direct investment (FDI) fell 3 per cent in the first half of 2025, extending a two-year slump as trade tensions, high interest rates and geopolitical uncertainty kept investors cautious, said UNCTAD.
Announcements of greenfield projects – when firms build new operations abroad – fell 17 per cent in number, driven by a 29 per cent decline in supply-chain-intensive manufacturing such as textiles, electronics and automotives, amid tariff uncertainty.
This downward trend in the primary sector was observed across all developing regions: project values in Africa dropped by 76 per cent, in Latin America and the Caribbean by 56 per cent, and in developing Asia by 35 per cent.
The number of greenfield projects in manufacturing – a more accurate indicator of investment activity – fell sharply by 26 per cent, with declines in both developed (-29 per cent) and developing economies (-21 per cent). Several developing countries that experienced significant tariff increases from the United States—such as Vietnam, Bangladesh, India, Brazil, and South Africa – also saw some of the largest declines in greenfield manufacturing projects.
Further, in the first half of 2025, cross-border M&A values in developing countries turned negative due to large divestments in extractives and utilities sectors. For example, Siemens Energy India (Germany) was spun off to its domestic shareholders in India for $11 billion.
Looking ahead, the international investment environment is expected to remain challenging throughout the remainder of 2025. Geopolitical tensions, regional conflicts, economic fragmentation, evolving industrial policies, and multinational efforts to de-risk supply chains are likely to continue weighing on FDI flows. Nevertheless, easing financial conditions, rising M&A activity in the third quarter, and higher overseas spending by sovereign wealth funds could support a modest rebound by year-end.
