With $38 billion FDI in 2018, India pips China.

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The year 2018 has been very good for the Indian economy so far as foreign direct investment (FDI) is concerned. According to a report, for the first time in two decades, India got more foreign inflows in 2018 than China.

It may be noted that China has historically been the favourite destination among emerging markets for global funds. But this year India saw 235 deals amounting to $37.7 billion, highest ever for the country, beating China, the ET report said citing data from Dealogic, a global M&A and capital markets data provider. The trade war between China and the US is seen as a major reason for the FDI slowdown to China.

“India has had a busy M&A calendar in 2018 and we will continue to see good traction in inbound M&As,” the publication quoted Kalpana Morparia, chief executive for South and Southeast Asia at JP Morgan Chase & Co as saying. “Given India’s demographics, the e-commerce story, the way India has leapfrogged the several stages of technological revolution, we expect a lot of activity in the technology and financial services space going forward,” Morparia added.

Global investors typically focus on India despite short-term uncertainty over the political climate, be it state or federal elections, Sonjoy Chatterjee, chairman, Goldman Sachs in India told ET.

The biggest deal that drove FDI flows to India this year is Walmart’s $16 billion buyout of Flipkart. Experts believe technology-driven consumer retail and financial services spaces are likely to see substantial M&A activity in the near future.

Other than ecommerce, asset divestment happening because of the new bankruptcy framework is also attracting foreign investors with deep pockets to deploy funds in the country, mainly in the manufacturing sector.