Introduction
A rise in domestic investments has been one of the most significant contributors to the growth story of India. Domestic investments in India are divided into two parts - public investments and private investments. Private investments are further divided into two parts, which are household investments and corporate investments. Private domestic investments depend on a slew of factors - macroeconomic stability, high household savings, productivity, access to credit, resolution of non-performing assets, clearing up of balance sheets, etc.
Domestic investments and foreign investments in India work hand-in-hand to help the growth of the country. Growth in emerging economies like India results mainly from innovations that allow domestic sectors to catch up with innovative technology. The process of catching up with the leader in any sector requires the cooperation of a foreign investor who is familiar with the leading technology and a domestic entrepreneur/investor who is familiar with the local conditions.
The Indian private investing space has also been showcasing signs of maturity over the past few years. The market has revealed that new investments accounted for about 50% of VC transactions. The VC-to-PE pipeline has also become robust and consistent.
The concept of 'Make in India' - Aatmanirbhar Bharat, various PLI schemes, and financial incentives provided by the government are a few examples of investor-friendly programmes that domestic companies are utilising to increase their production base and create new capacities, which leads to increasing domestic investments. There are multiple investors driving domestic investments in the country:
- Government/Public Sector Enterprises
- Private Sector Enterprises
- Banks/Financial Institutions/Domestic Institutional Investors
- Retail Investors
Market Activity
India remains the fastest-growing major economy in the world, with real Gross Domestic Product (GDP) expanding at 6.5% YoY and nominal GDP rising sharply from Rs. 1,06,57,000 crore (US$ 1.24 trillion) in FY15 to Rs. 3,31,03,000 crore (US$ 3.88 trillion) in FY25. The Reserve Bank of India (RBI) anticipates this momentum will carry forward into FY26. Global and domestic forecasts are similarly upbeat, according to the United States (US), India is expected to grow by 6.3% in the current year and 6.4% in the following year, while the Confederation of Indian Industry (CII) projects a slightly higher growth range of 6.40–6.70%.
As of FY25, Domestic Institutional Investors (DIIs) reached a historic milestone in India’s capital market, with their share climbing to an all-time high of 17.62%, up from 16.89% at the end of December 2024. This surge was driven by a substantial net investment of Rs. 1,89,000 crore (US$ 22.16 billion) during the March 2025 quarter, allowing DIIs to surpass the 17.22% share held by Foreign Institutional Investors (FIIs). This marks a significant shift in market dynamics, highlighting the growing influence of domestic investors.
As of July 16, 2025, the number of registered investors on Bombay Stock Exchange (BSE) reached 22,14,93,839 marking a 22% YoY and 1.37% MoM increase, according to BSE data.
In FY25, a total of 318 companies, including 79 mainboard and 239 Small and Medium Enterprises (SME) firms, raised Rs. 1,72,000 (US$ 20.17 billion) through initial public offerings (IPOs). This figure exceeded the combined capital raised during the previous two financial years, FY24 and FY23, highlighting a significant surge in fundraising activity.
India's Private Equity (PE)/Venture Capital (VC) investment environment is also scaling new heights, with increases in deal size, deal activity, and fundraising, as well as improvements in term sheets and benchmarking practices. In Q1 CY25, private equity (PE) and venture capital (VC) investments stood at Rs. 1,16,861 crore (US$ 13.7 billion) across 284 deals.
Investments/developments
In recent years, the Indian economy has undergone a significant transformation, driven by initiatives like ‘Aatmanirbhar Bharat’ that accelerated Production-Linked Incentive (PLI) schemes across key sectors. This has boosted domestic industrial capacity and attracted strong domestic investments. Domestic Institutional Investors (DIIs) have notably increased their presence in the capital market, surpassing Foreign Institutional Investors (FIIs) and reflecting rising investor confidence. India’s active trade diplomacy has led to Free Trade Agreements (FTAs) with Australia, the United Arab Emirates (UAE), and the United Kingdom with ongoing negotiations with the United States, the European Union, and New Zealand. These factors combined have strengthened India’s economic resilience and its appeal as a stable investment destination amid global uncertainties. Some of the recent notable investments and development are as follows:
- Microsoft has announced a significant Rs. 25,587 crore (US$ 3 billion) investment in India over the next two years to bolster its cloud and artificial intelligence (AI) infrastructure. This initiative aims to establish new data centres and accelerate AI innovation, aligning with Prime Minister Mr. Narendra Modi's vision of transforming India into a developed nation by 2047. Additionally, Microsoft plans to train 10 million individuals in AI skills by 2030, reinforcing its commitment to fostering a robust AI ecosystem in India.
- ArcelorMittal Nippon Steel (AMNS) India has announced plans to invest Rs. 2,55,870 crore (US$ 30 billion) over the next decade to expand its steel production facilities in Hazira, Odisha, and Andhra Pradesh. The investment is aimed at meeting India’s growing domestic demand for high-quality steel, with a strong focus on infrastructure, automotive, and industrial development sectors.
- Haier Appliances India looks to become a US$ 2 billion sales company in the next 3-4 years on the back of a high double-digit growth powered by expansion in product category and channels, according to a top official. The home appliances maker has earmarked an investment of over Rs. 1,000 crore (US$ 117.2 million) between FY24-28 to set up new AC Production and Injection Molding Units. It has already ploughed in Rs. 2,400 crore (US$ 281.4 million) in its plants at Pune and Greater Noida so far.
- ACME Solar announced its intention to invest Rs. 17,000 crore (US$ 1.99 billion) in capital expenditures by FY26, emphasizing the development of hybrid and round-the-clock renewable energy capacities.
- Apple is significantly increasing its manufacturing footprint in India to reduce reliance on China. A new Tata Electronics facility in Hosur, Tamil Nadu, has commenced production of older iPhone models. Additionally, Foxconn's US$ 2.6 billion plant in Bengaluru, Karnataka, is set to begin operations soon, aiming to produce iPhone 16 and 16e models and create 50,000 jobs. As of March 2025, India accounts for about 18% of global iPhone production, with plans to shift most U.S.-bound iPhone production to India by 2026
- Assets under management of the wealth management industry is expected to increase from Rs. 95,23,800 crore (US$ 1.1 trillion) in FY24 to Rs. 1,99,13,400 crore (US$ 2.3 trillion) by FY29. This notable growth will be fuelled by changing macroeconomic conditions, rising income levels, and a significant rise in the number of affluent households.
- According to a recent report by Colliers, a real estate consulting firm, private equity investments in the Indian real estate sector reached a 3-year high in the second quarter of FY25, totalling US$ 2.5 billion. The industrial and warehousing segment accounted for the largest share of these investments, making up 61% of the total, which equates to US$ 1.5 billion.
- Mahindra Susten, a leading renewable energy solutions provider, is embarking on a pioneering venture into the hybrid renewable energy sector. The company has launched a groundbreaking Rs. 1,200 crore (US$ 144 million) project in the state of Maharashtra. This innovative initiative integrates 101 MW of wind power capacity and 52 MW of solar power capacity, with the aim of generating a remarkable 460 million kWh of clean, sustainable energy. It is expected to significantly reduce CO2 emissions by 420,000 tonnes.
- In February 2024, Tata Group companies announced of signing Memorandum of Understanding (MoU) with Karnataka Government to invest Rs. 2,330 crore (US$ 279.48 million) in the state.
- Prime Minister, Mr. Narendra Modi recently inaugurated and laid the foundation stone for 112 National Highway projects valued at approximately US$ 12.1 billion (Rs. 1 Lakh crores) in Gurugram, Haryana.
- Hyundai Motors has successfully acquired General Motors India's Talegaon plant in Maharashtra in August 2023 and announced a substantial investment of US$ 721.94 million (Rs. 6,000 crores) in the state.
- In October 2023, NCLT approved resolution plan of Himadri Speciality Chemical and Dalmia Bharat Refractories to acquire Birla Tyres.
- In October 2023, Tata Motors acquired 27% in digital platform Freight Tiger.
- In October 2023, Bajaj Finance acquired 26% stake in Pennant Technologies for Rs. 267.50 crores (US$ 32.18 million). According to the IVCA-EY monthly PE/VC roundup, August 2023 recorded investments worth US$ 5.2 billion.
- In August 2023, growth deals valued at US$ 2.4 billion were the highest across 14 deals. PIPE investments recorded US$2.1 billion across 18 deals in August 2023.
- Infrastructure was the top sector in August 2023, backed by GQG Partners Inc. in Adani Power Limited, recording US$ 1.8 billion in PE/VC investments across six deals. Retail and consumer products were the second largest sector with US$ 1 billion recorded across four deals.
- In September 2023, Shree Renuka Sugars has inked a share purchase agreement to acquire 100% stake in Anamika Sugar Mills.
- In September 2023, Reliance Retail Ventures acquired majority stake in Alia Bhatt’s Ed-a-Mamma brand.
- In August 2023, Jewellery retailer Titan acquired another 27.18% stake in CaratLane for Rs. 4,621 crores (US$ 556.01 million).
- In July 2023, Bikaji Foods International acquired a 49% stake in Bhujialalji for US$ 6,21,946.53.
- In July 2023, India's leading telecom firm, Bharti Airtel acquired an additional 20.6% stake in the SD-WAN startup, Lavelle Networks.
- In July 2023, Adani Enterprises acquired approximately 30% ownership in Start Enterprises Pvt Ltd (SEPL), the parent company of Trainman, an online platform for booking train tickets.
- In June 2023, Tata Communications is set to acquire US-based enterprise messaging firm Kaleyra for US$ 100 million in an all-cash deal.
- In June 2023, Asian Paints acquired an additional 11% stake in White Teak.
- In May 2023, JSW Steel acquired National Steel and Agro Industries for US$ 75.73 million.
- In February-April 2023:
- PhonePe, India's most valuable payments firm with an estimated value of US$ 12 billion, has raised US$ 650 million across four tranches from its backers, including Tiger Global.
- The Souled Store, a direct-to-consumer (D2C) apparel brand, has raised Rs. 135 crores (US$ 16 million) in funding led by Xponentia Capital. The company’s existing investors Elevation Capital and RPSG Capital also participated in the round
- Agri startup Sorted, a tech platform founded by the ex-CEO of Milkbasket for quality fruits and vegetables, has raised over US$ 5 million as seed funding to grow business.
- Electric vehicle charging infra platform CHARGE+ZONE on Monday announced raising US$ 54 million in Series A1 funding round led by global impact investment management firm BlueOrchard Finance.
- NCR-based Industrial and Logistics real estate developer Pragati Group, has raised US$ 200 million of equity capital from a Private Equity fund based in Singapore. Pragati has been offering customized warehouse development solutions since its inception in 2010 to top MNCs like Amazon India, Flipkart, DHL-Bluedart, Bosch, Daikin, and many more.
- In January 2023:
- Deep-tech battery startup Log9 bagged US$ 40 million from Amara Raja Batteries Ltd and Petronas Ventures.
- On January 17, 2023, Sequoia Capital invested US$ 15 million in CloseFactor as a lead investor.
- Virohan, a healthcare edtech start-up raised US$ 7 million from Blume Ventures, with participation from Bharat Inclusion Seed Fund, Rebright Partners, and others.
Government Initiatives
With the government's focus on making business in India easier through the establishment of nation-specific offices to "handhold" foreign investment, India has advanced in recent years in the rankings for ease of doing business. The government has also attempted to rein in the aggressive tax administration through more openness and transparency. It has also taken multiple other initiatives to improve the business regulatory environment in the country and simplified the process of making domestic investments. Some of these are:
- The Indian government has earmarked Rs. 1,345 crore (US$ 157.7 million) to boost domestic production of rare earth magnets, crucial for electric vehicles, electronics, and renewable energy. The initiative aims to reduce import dependency and strengthen India's critical mineral supply chain.
- Prime Minister Mr. Narendra Modi inaugurated and laid the foundation stone for development projects worth over Rs. 18,600 crore (US$ 2.18 billion) in Odisha. The investments span key sectors including drinking water, irrigation, agricultural infrastructure, healthcare, rural connectivity, and transportation, underscoring the government’s focus on boosting state-level development and infrastructure.
- The Union Minister of Ports, Shipping & Waterways, announced initiatives to enhance the capacity of Kandla Port, involving an investment exceeding Rs. 57,000 crore (US$ 6.59 billion). Among the key announcements is the establishment of a new Mega Shipbuilding Project, which will entail an investment of Rs. 30,000 crore (US$ 3.47 billion).
- India’s new rules for environmental, social and governance investments and ratings are likely to attract more investors to the nation’s US$ 1.4 billion market and serve as a model for other countries. Over the last two years, India has implemented many measures to regulate its market for green and other assets, most notably permitting domestic fund managers to create plans under six types of ESG strategies.
- The introduction of the Goods and Services Tax, easing liquidity problems of NBFCs and Banks, the reduction of corporate tax, improvements to the business environment, changes to the FDI policy, reduction in Compliance Burden, policies to support domestic manufacturing through public procurement orders, and the Phased Manufacturing Programme (PMP) are just a few of the actions taken by the government to encourage domestic investments.
- The National Logistics Policy (NLP) aims to decrease the cost of logistics and make it to par with that of other developed nations. A comprehensive approach to address cost inefficiencies is being laid down by establishing an interdisciplinary, cross-sectoral, multijurisdictional framework for enhancing the entire logistics ecosystem. This would bolster India's economy, provide employment opportunities, and make Indian products more competitive in the global market. It was launched on September 17, 2022.
- The Department for Promotion of Industry and Internal Trade (DPIIT) has introduced a dynamic reform exercise called the Business Reforms Action Plan, which ranks all the states and UTs in the country based on the implementation of designated reform parameters. The reforms have focused on streamlining the current rules and procedures and getting rid of unnecessary requirements and steps. The Action Plan covers multiple reform areas such as:
- Investment Enablers
- Online Single Window System
- Land administration and Transfer of Land and Property
- Construction Permits Enabler
- Labour Regulation Enablers
- Environment Registration Enablers
- Inspection Enablers
- Paying Taxes
- Obtaining Utility Permits
- The Ministry of Labour and Employment has taken several steps to streamline labour laws to make conducting business easier. By condensing, combining, and rationalising the pertinent provisions of 29 Central Labour Laws, the Government has notified four labour codes: the Code on Wages, 2019, the Industrial Relations Code, 2020, the Code on Social Security, 2020, and the Code on Occupational Safety, Health, and Working Conditions, 2020.
- The government introduced the India Industrial Land Bank (IILB), which is a GIS-based portal - a one-stop repository of all industrial infrastructure-related information - connectivity, infrastructure, natural resources, terrain, plot-level information on vacant plots, line of activity, and contact details.
Road Ahead
The mutual fund industry in India has been witnessing consistent growth in portfolio numbers over the past few years. As of May 2025, the mutual fund industry's Assets Under Management (AUM) surpassed the Rs. 72.2 lakh crore (US$ 846.52 billion) milestone for the first time and witnessed 22.5% increase YoY.
To achieve a GDP of US$ 5 trillion by FY29, India needs to spend about US$ 1.4 trillion over these years on infrastructure. Liberal FDI policies, quick solutions to corporate disputes, a simplified tax structure, ease of doing business, and a boost to public and private expenditure are all part of India's attempt to implement reforms to unlock the country's investment potential, which is expected to improve the business environment.
In recent years, India has actively invited global investors to participate in its growth story, highlighting reforms that create opportunities across sectors. For instance, at the 14th India–France CEOs Forum held in Paris in February 2025, Prime Minister Mr. Narendra Modi emphasised India’s investor-friendly policies and infrastructure initiatives, inviting French businesses to deepen collaboration and invest in India’s expanding economy.
Through such diplomatic engagements and business forums, the government continues to position India as a preferred destination for both foreign and domestic investments, reinforcing confidence in its long-term economic prospects.
Initiatives like Vibrant Gujrat Summit and Production-Linked Incentive (PLI) schemes has demonstrated good results. Various government initiatives, such as ease of doing business reforms, infrastructure development, and policy support are further aiding in driving domestic investments.
Note: Conversion rate used for July 2025 is Rs. 1 = US$ 0.012
References: Press Information Bureau (PIB), Media Reports, World Bank, Database of Indian Economy (DBIE), Knight and Frank
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