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:
India’s Real GDP for FY25 is projected to reach Rs. 187.95 lakh crore (US$ 2.2 trillion), growing at 6.5% from Rs. 176.51 lakh crore (US$ 2.06 trillion) in FY24. Key growth drivers include construction (8.6%), financial and real estate services (7.2%), and trade and transport (6.4%), supporting economic resilience amid global challenges.
Retail and High Net-worth Individual (HNI) investors and domestic institutional investors (DIIs) combined share, which includes domestic mutual funds, insurance companies, banks, financial institutions, pension funds, etc., reached an all-time high of 25.50% as of June 30, 2023.
As of April 25, 2025, the number of registered investors on BSE reached 2,14,32,53,39—marking a 26% year-on-year and 1.01% month-on-month increase, according to BSE data.
Around 239 SME companies went public in FY25, raising a total of Rs. 9,966 crore (US$ 1.17 billion) through IPOs.
Domestic Institutional Investors (DIIs) invested nearly Rs. 1.86 lakh crore (US$ 21.81 billion) during Q3 FY25, taking their share of holdings in listed companies on NSE to an all-time high of 16.9%, up from 16.46% in the previous quarter.
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.
In many ways, the year 2021 was a turning point for the Indian economy as initiatives like Aatmanirbhar Bharat sped up the formal implementation of several Production-Linked Incentives (PLI) schemes. There was also a push to negotiate comprehensive free trade agreements successfully negotiated with Australia and the UAE. This has led to a huge quantum of domestic inflows coming into the Indian market and making it resilient amidst global uncertainties. With the improving economic scenario, there have been quite a few investments in various sectors in India. Some of them are as follows:
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 mutual fund industry in India has been witnessing consistent growth in portfolio numbers over the past few years. In CY 2024, the mutual fund industry's Assets Under Management (AUM) surpassed the Rs. 68 lakh crore (US$ 786.6 billion) milestone for the first time, witnessed 34% increase compared to Rs. 50.78 lakh crore (US$ 587.5 billion) in December 2023. Similarly, assets under management (AUM) of the Indian mutual fund industry grew 23.11% YoY in March 2025, underscoring investors’ confidence in India’s economic trajectory despite global headwinds.
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 line with this, in May 2022, during the India-Denmark Business Forum, Prime Minister Mr. Narendra Modi applauded India's reforms and investment opportunities and stated that those who don't invest in the country are bound to miss out.
He stated that India's ongoing economic reforms have created investment opportunities in various sectors like renewable energy, health, ports, shipping, circular economy, and water management, and invited Denmark, as well as other foreign countries, to invest in these sectors.
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 March 2025 is Rs. 1 = US$ 0.012
References: Press Information Bureau (PIB), Media Reports, World Bank, Database of Indian Economy (DBIE), Knight and Frank