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) growing by 7.8% in Q1 FY26, the highest in the last five quarters. In comparison, growth was 7.4% in Q4 FY25 and 6.5% in Q1 FY25. According to the Ministry of Statistics and Programme Implementation, nominal GDP rose by 8.8% during the same period. Nominal GDP increased significantly 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.
Global and domestic forecasts are similarly upbeat, the Reserve Bank of India (RBI) has raised India’s GDP growth forecast for FY26 to 6.8%, up from its earlier estimate of 6.5%. Similarly, the Organisation for Economic Cooperation and Development (OECD) increased its 2025 growth projection for India by 40 basis points to 6.7%, compared to 6.3% projected in June 2025.
In August 2025, Domestic Institutional Investors (DIIs) recorded their 25th straight month of net inflows, investing Rs. 94,829 crore (US$ 10.8 billion), the highest in 10 months. In the first five months of FY26, DIIs invested Rs. 3.24 lakh crore (US$ 37.6 billion), which makes up ~53% of the total investment made in FY25.
According to BSE data, as of October 13, 2025, the number of registered investors on Bombay Stock Exchange (BSE) reached 22,98,09,534, marking a 18.39% YoY and 1.27% MoM increase.
In September 2025, India set a three-decade record for IPO activity, with 25 companies raising Rs. 13,302 crore (nearly 20% of total proceeds), marking the highest monthly tally since January 1997. In H1 FY26, 65 firms are set to raise up to Rs. 69,532.91 crore (US$ 8.2 billion), 35% higher than the Rs. 51,390 crore raised by 40 companies in the same period of FY25, reflecting a strong rebound in primary market activity after the brief slowdown earlier in the year.
In August 2025, India recorded 84 Private Equity (PE) - Venture Capital (VC) investments worth Rs. 10,827 crore (US$ 1.24 billion). In the six months ending June 2025 (H1 2025), the country witnessed 519 PE/VC deals amounting to Rs. 1,28,523 crore (US$ 14.93 billion), reflecting continued investor confidence in India’s growth potential.
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:
- On September 2, 2025, Tata Electronics signed an MoU with Germany’s Merck to collaborate on semiconductor materials, fabrication infrastructure, and supply chain development for Tata’s upcoming Fab in Dholera, Gujarat.
- On July 21, 2025, Reliance Industries announced progress on its Rs. 88,000 crore (US$ 10 billion) clean energy investment, aimed at developing gigafactories and achieving net-zero carbon emissions by 2035. Analysts view this as a major growth driver for the company’s new energy business.
- 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.
- Announced on October 9, 2025, Bharat Petroleum Corporation Limited (BPCL) will invest about Rs. 96,862 crore (US$ 11 billion) to set up a new refinery with a capacity of 1,80,000-2,40,000 barrels per day in Andhra Pradesh. The state government has allocated 6,000 acres of land for the refinery and petrochemicals project and directed BPCL to start commercial operations by January 2029.
- Saatvik Green Energy announced on October 9, 2025, that it will invest Rs. 3,150 crore (US$ 378 million) to develop its Odisha facility, expanding its solar module capacity to 4 GW and solar cell capacity to 4.8 GW.
- 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.
- 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.
- 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:
- India’s first domestically produced semiconductor chip is expected to be available by the end of 2025. On August 23, 2025, Prime Minister Mr. Narendra Modi announced that several semiconductor fabrication plants are currently under construction and that India is also making rapid progress in developing its own 6G network.
- Secretary, Ministry of Electronics and Information Technology (MeitY), Mr. S. Krishnan stated that the Central Government has committed nearly Rs. 62,900 crore (US$ 7.17 billion), which is about 97% of the Rs. 65,000 crore (US$ 7.41 billion) earmarked under the India Semiconductor Mission. The remaining funds will support a few smaller projects. Of this, Rs. 10,000 crore (US$ 1.14 billion) has been allocated for modernising the Semiconductor Laboratory in Mohali, Punjab, and Rs. 1,000 crore (US$ 114 million) for the design-linked incentive scheme.
- In October 2025, the Government of India, through the Ministry of Agriculture and Farmers Welfare, launched the PM Dhan-Dhaanya Krishi Yojana and the Self-Reliance in Pulses Mission. The initiatives involve public investments of Rs. 42,000 crore (US$ 5.04 billion) to improve agricultural infrastructure, boost productivity, and enhance farmers’ income across the country.
- 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
India’s domestic investment outlook for FY26 and beyond remains strong, supported by sustained economic expansion, steady policy momentum, and improving investor confidence. The government’s continued push through initiatives such as ‘Make in India’, ‘Aatmanirbhar Bharat’, and the Production-Linked Incentive (PLI) schemes is expected to drive capacity creation and strengthen industrial output.
Emerging sectors such as semiconductors, renewable energy, electric mobility, and advanced manufacturing are likely to see significant investments over the next few years, reflecting India’s growing importance in global supply chains. The country’s stable macroeconomic fundamentals and rising private sector participation are also expected to keep investment activity buoyant in FY26.
At the same time, structural reforms in taxation, logistics, and labour codes, along with improvements in ease of doing business and financial inclusion, will continue to create a supportive environment for domestic investors. The increasing presence of Domestic Institutional Investors (DIIs) and a rising base of retail investors are helping deepen India’s capital markets and strengthen its investment ecosystem.
With GDP growth projected at around 6.8% for FY26 and strong momentum across core sectors, domestic investments will remain a critical driver in achieving India’s long-term goal of becoming a US$ 5 trillion economy by 2027.
Note: Conversion rate used for October 2025 is Rs. 1 = US$ 0.011
References: Press Information Bureau (PIB), NSE, BSE, Media Reports, IVCA
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