Foreign Direct Investment (FDI)

Overview

Last updated: Aug, 2026

Introduction

Foreign Direct Investment (FDI) stands as a key catalyst for India's economic growth, constituting a substantial non-debt financial reservoir for the nation's developmental endeavours. International corporations strategically invest in India, capitalizing on the country's unique investment incentives, including tax incentives and relatively competitive labour costs. This not only facilitates the acquisition of technological expertise but also fosters job creation and various ancillary advantages. The influx of these investments into India is a direct result of the government's proactive policy framework, a dynamic business environment, improving global competitiveness, and a burgeoning economic influence.

The implementation of the Goods and Services Tax (GST) has further simplified the tax framework and increased transparency, while Special Economic Zones (SEZs) continue to offer infrastructure support and fiscal incentives that appeal to global investors. Recent policy momentum includes legislative approval to raise the FDI ceiling in the insurance sector from 74% to 100%, expected to broaden participation by international insurers and deepen capital flows into the financial sector. The total amount of EFDI inflows received during (April 2000-March 2026) was Rs. 52,85,866 crore (US$ 787.72 billion). This FDI has come from more than 180 countries that have invested across 34 states and UTs and 63 sectors in the country.

India has reached a significant milestone in its economic development, with gross foreign direct investment (FDI) inflows totalling an impressive US$ 1.16 trillion since April 2000. FDI equity inflows during FY26 increased to Rs. 5,6,936 crore (US$ 58,846 million), up from Rs. 4,21,929 crore (US$ 50,018 million) in the corresponding period FY25. The rise represents a robust 23% year-on-year expansion in rupee terms, reflecting continued strength in foreign investment activity and sustained confidence in India’s growth trajectory.

Market Size

India's FDI inflows have increased ~20 times from FY01 to FY26. According to the Department for Promotion of Industry and Internal Trade (DPIIT), India's cumulative FDI inflow stood at US$ 1.16 trillion between April 2000-March 2026, mainly due to the government's efforts to improve the ease of doing business and easing of FDI norms. The total FDI inflow into India in FY26 stood at Rs. 8,25,485 crore (US$ 94.52 billion) and FDI equity inflow for the same period stood at Rs. 5,16,936 crore (US$ 58.84 billion).

From April 2000-March 2026, India's service sector attracted the highest FDI equity inflow of 16.36% amounting to Rs. 8,52,631 crore (US$ 128.85 billion), followed by the computer software and hardware industry at 15.82%, amounting to Rs. 9.07.251 crore (US$ 124.64 billion), trading at 6.55% amounting

Bar graph depicting growth in India's FDI market size over the years

to Rs. 3,69,756 crore (US$ 51.58 billion), automobile industry at 5.12% amounting to Rs. 2,70,230 crore (US$ 40.31 billion), and telecommunications at 5.10% amounting to Rs. 2,42,122 crore (US$ 40.19 billion).

India also had major FDI inflows during April 2000-March 2026, coming from Singapore at Rs. 13,92,006 crore (US$ 192.68 billion) with a total share of 24.72%, followed by Mauritius at 23.71% with Rs. 11,50,846 crore (US$ 186.76 billion), the USA at 10.39% with Rs. 5,91,561 crore (US$ 81.82 billion), the Netherlands at 7.19% with Rs. 3,92,849 crore (US$ 56.67 billion), and Japan at 6.11% with Rs. 3,16,522 crore (US$ 48.14 billion).

The state that received the highest FDI equity inflow during April 2000-March 2026, was Maharashtra with Rs. 8,59,196 crore (US$ 107.09 billion) at 31.35%, followed by Karnataka at 20.66% with Rs. 5,58,383 crore (US$ 70.58 billion), Gujarat at 14.82% with Rs. 3,98,236 crore (US$ 50.62 billion), Delhi at 12.88% with Rs. 3,50,493 crore (US$ 43.98 billion), and Tamil Nadu at 5.66% with Rs. 1,56,544 crore (US$ 19.34 billion).

Investments/Developments

India has become an attractive destination for FDI in recent years, influenced by several factors that have boosted FDI. In the Global Innovation Index (GII) 2025, India secured the 38th position among 139 global economies. This marks a significant improvement from its 81st rank in 2015, demonstrating India's commitment to fostering a robust innovation ecosystem that is underpinned by strong policies, investment in research and development (R&D), and a collaborative environment for startups and industries. These factors have boosted FDI investments in India. Some of the recent developments are as follows:

During FY27, up to August 12, 2026, debt instruments attracted net inflows of Rs. 68,120 crore (US$ 7.13 billion), while mutual fund schemes received Rs. 988 crore (US$ 0.10 billion). Alternative Investment Funds (AIFs) also recorded inflows of Rs. 10 crore (US$ 1 million) during the period. Cumulative FPI investments in India stood at Rs. 14,47,459 crore (US$ 263.85 billion) as of August 12, 2026, highlighting continued foreign investor participation in India’s financial markets.
On 11th July 2026, India and New Zealand elevated their bilateral relationship to a Strategic Partnership and unveiled a Roadmap to 2030, supported by 10 agreements and memoranda of understanding across defence, trade, maritime security, agriculture, tourism, sports, culture and scientific research. The two countries also set a target to double bilateral trade to Rs. 35,000 crore (US$ 3.75 billion) by 2030, building on the recently concluded India-New Zealand Free Trade Agreement.
On 8th July 2026, India hosted the 13th ASEAN-India Trade in Goods Agreement (AITIGA) Joint Committee meeting in New Delhi to advance the ongoing review of the trade pact. The committee directed the expedited finalisation of outstanding chapters, with time-bound deliverables for key areas including customs procedures, market access and rules of origin, while bilateral trade between India and ASEAN reached US$ 128 billion in FY26.
On 19 June 2026, India and Uzbekistan agreed to deepen bilateral trade and work towards doubling trade in the next three years, while addressing non-tariff barriers and strengthening logistics connectivity.
On 15 June 2026, India and Slovakia agreed to elevate bilateral relations to a Comprehensive Partnership during Prime Minister Narendra Modi’s visit to Slovakia. The two countries agreed to strengthen cooperation in trade, advanced manufacturing, defence, digital technologies, artificial intelligence, energy, space, healthcare and connectivity, while promoting greater investment and technology collaboration.
On 14 June 2026, India and France announced 13 key outcomes to deepen strategic, technological and trade cooperation across innovation, artificial intelligence, space, education and infrastructure. The two countries agreed to establish a mechanism to double bilateral trade over the next five years, while advancing cooperation in digital payments, critical supply chains, railways, digital health, startups and human space exploration.
On 5 June 2026, India and the Philippines discussed strengthening bilateral trade and investment cooperation at the 14th Meeting of the Joint Working Group on Trade and Investment in Manila. Bilateral trade reached US$ 3.9 billion in FY26, with both sides exploring cooperation in infrastructure, digital technologies, artificial intelligence, information technology, energy and pharmaceuticals.
On 28 May 2026, India and the Republic of Korea concluded the 12th round of negotiations to upgrade the India–Korea Comprehensive Economic Partnership Agreement (IK CEPA) in New Delhi. Both sides reviewed progress across key areas including trade in goods and services, investment, rules of origin and SPS measures, while agreeing to establish dedicated sub-groups on digital trade, supply chain cooperation and strategic industrial collaboration to accelerate a balanced and modernised CEPA.
On 8 May 2026, India and Canada concluded the second round of negotiations for the proposed Comprehensive Economic Partnership Agreement (CEPA) in New Delhi, reaffirming their commitment to a balanced and mutually beneficial trade agreement. The negotiations covered key areas including trade in goods and services, intellectual property, rules of origin, sanitary and phytosanitary measures, and technical barriers to trade, with both sides agreeing to continue discussions during the next round in Ottawa in July 2026.
On 1 May 2026, India and Tanzania held the 5th India–Tanzania Joint Trade Committee (JTC) meeting in Dar es Salaam to strengthen bilateral trade, investment and economic cooperation. Bilateral trade increased to Rs. 78,474 crore (US$ 9.02 billion) in FY2025–26 from Rs. 72,576 crore (US$ 8.64 billion) in FY2024–25, with both countries agreeing to deepen collaboration across sectors including pharmaceuticals, MSMEs, digital public infrastructure, agriculture, renewable energy, shipbuilding, railways and healthcare.
India and New Zealand signed a landmark Free Trade Agreement (FTA) on April 27, 2026, concluding negotiations in a record nine months. The agreement provides duty-free access to 100% of Indian exports to New Zealand and is expected to strengthen bilateral trade, investment, services, mobility and agricultural cooperation between the two countries.
India and Kenya reaffirmed their commitment to strengthening bilateral economic ties during the 10th India–Kenya Joint Trade Committee (JTC) meeting held in Nairobi on April 27-28, 2026. The discussions focused on expanding trade, investment and sectoral cooperation, reflecting the growing strategic partnership between the two countries.
India and Austria reinforced their economic partnership at the India–Austria Business Forum held in New Delhi on April 17, 2026, during the visit of Austrian Federal Chancellor Dr. Christian Stocker. The forum brought together government officials and industry leaders from both countries to explore opportunities for expanding trade, investment and strategic cooperation across key sectors.
India and Norway reaffirmed their commitment to deepening bilateral economic cooperation during the 3rd Session of the India–Norway Dialogue on Trade and Investment (DTI) held in New Delhi on April 16, 2026. The discussions underscored the growing importance of the India–EFTA Trade and Economic Partnership Agreement (TEPA), which came into force on October 1, 2025, as a key framework for enhancing trade, investment and business collaboration between the two countries.
On March 5, 2026, India and Finland elevated bilateral ties to a Strategic Partnership in Digitalization and Sustainability during the state visit of Finnish President Alexander Stubb, strengthening cooperation across trade, technology, AI, climate action, and innovation. Both countries also set a target to double bilateral trade by 2030, supported by the India-EU FTA and growing collaboration in startups, clean energy, and digital transformation.
India reaffirmed its commitment to strengthening bilateral ties with Chile across trade, investment, critical minerals, clean energy, and innovation during Minister of State for External Affairs Kirti Vardhan Singh’s meeting with Chile’s President-Elect José Antonio Kast.
On March 2, 2026, India and Japan held the 7th India–Japan CEPA Joint Committee Meeting in Tokyo, where both sides reviewed progress under the Comprehensive Economic Partnership Agreement and explored ways to strengthen bilateral trade and investment ties.
On 24 February 2026, India and Israel commenced the first round of negotiations for the proposed Free Trade Agreement (FTA) in New Delhi, aimed at strengthening bilateral trade and economic cooperation. The agreement is expected to unlock significant opportunities across sectors such as technology, AI, cybersecurity, manufacturing, agriculture, and services, while providing greater certainty for businesses and MSMEs.
On 24 February 2026, India and the Gulf Cooperation Council (GCC) formally launched negotiations for a comprehensive Free Trade Agreement (FTA), marking a significant milestone in strengthening bilateral trade and investment ties.
On 22 February 2026, India and Brazil set an ambitious target to raise bilateral trade to US$ 30 billion by 2030, highlighting the growing strength of economic relations between the two countries. Both nations also agreed to expand cooperation across strategic sectors such as energy, satellites, biofuels, agriculture, healthcare, and sustainable aviation fuel, further strengthening long-term trade and investment ties.
On 18 February 2026, India and France elevated their bilateral ties to a Special Global Strategic Partnership, marking a major step forward in cooperation across defence, critical minerals, advanced technologies, climate action, and economic security. The two countries also launched the 2026 India-France Year of Innovation, aimed at strengthening collaboration in AI, startups, research, and digital technologies.
The India–US interim trade agreement marks a significant milestone in strengthening bilateral economic relations, enhancing market access, and boosting export competitiveness for Indian industries. The reduction in US tariffs to 18%, along with improved access across key sectors such as textiles, agriculture, technology, and manufacturing, is expected to create new growth opportunities for Indian exporters and MSMEs.
India and Bhutan reaffirmed their long-standing partnership in the power sector, with discussions focused on accelerating key hydropower projects such as Punatsangchhu-I, Punatsangchhu-II, and Sankosh. Both countries also reviewed plans for cross-border transmission links up to 2040 to strengthen regional energy security and power trade.
India strengthened bilateral cooperation with Vietnam in the silk, textiles, and technical textiles sectors through a five-day official visit led by the Central Silk Board and leading silk entrepreneurs. The visit focused on enhancing collaboration across sericulture, handlooms, handicrafts, and textile value chains, while also promoting participation in Bharat Tex 2026.
India and the European Union have concluded negotiations for a comprehensive Free Trade Agreement (FTA), marking a major milestone in one of India’s most strategic economic partnerships. The agreement covers a combined market of Rs. 2,091.6 lakh crore (US$ 24 trillion) and provides preferential access for over 99% of India’s exports by trade value, significantly expanding trade opportunities. The FTA is expected to unlock substantial untapped trade potential, deepen market integration, and strengthen long-term economic ties between India and the EU.
India and the European Union concluded negotiations for a Free Trade Agreement, unlocking access to the EU pharmaceuticals and medical devices market valued at Rs. 49.19 lakh crore (US$ 572.3 billion) and providing preferential, duty-free access for key ‘Made in India’ products.
The World Bank has ranked India among the top five countries globally in terms of private investment in infrastructure among low- and middle-income economies, with India accounting for over 90% of South Asia’s total private infrastructure investment.
India and Oman have signed a Comprehensive Economic Partnership Agreement (CEPA) to deepen trade in goods and services, investment, and professional mobility, granting India 100% duty-free access across 98.08% of tariff lines covering 99.38% of its exports.
The Italy–India Business Forum 2025 was held in Mumbai on 11 December 2025 during the visit of Italy’s Deputy Prime Minister Antonio Tajani, marking a key milestone in strengthening bilateral economic ties. The Forum focused on expanding trade, enhancing supply-chain resilience, and deepening cooperation across sectors such as automotive, clean energy, agri-food, sports technologies, and connectivity.
The Union Minister of Commerce and Industry, Mr. Piyush Goyal, announced that India and Canada will start discussing the Terms of Reference (ToR) to set up a Free Trade Agreement (FTA). According to the Minister, both countries want to begin formal engagement again in trade matters and will formulate the groundwork for upcoming negotiations. Consequently, the ToR discussions will define the affected areas, objectives, and framework of the proposed trade agreement.
On March 31, 2026, Prime Minister Mr. Narendra Modi inaugurated the Kaynes Semicon semiconductor plant at Sanand, Gujarat, marking the commencement of production at the facility and strengthening India’s efforts to build a globally competitive semiconductor ecosystem. The project represents a significant milestone under the India Semiconductor Mission and reinforces the country’s vision of becoming a reliable semiconductor manufacturing hub.
India and Zambia signed a memorandum of understanding (MoU) on July 18 to promote cooperatives and facilitate trade alliances between the two nations. Union Home Minister and Minister of Cooperation, Mr. Amit Shah, informed the Lok Sabha that the Cooperation Ministry is working to strengthen India's cooperative export ecosystem through Indian missions abroad. The ministry is using Indian missions to provide market information to the National Cooperative Exports Ltd (NCEL) and connect it with importers in specific countries.
India is emerging as a reliable alternative hub in the global semiconductor supply chain, supported by strong domestic demand and policy push. India’s semiconductor market, valued at about US$ 38 billion in 2023, is projected to nearly triple to ~US$ 109 billion by 2030, driven by growth in smartphones, automotive electronics, industrial automation, and data centres. To cut import dependence and attract fabs and advanced packaging units, the government launched a US$ 10 billion incentive scheme in 2021 under the India Semiconductor Mission. As of October 2025, 10 projects across six states have been approved, with total investments exceeding Rs. 1.6 trillion (US$ 18–19 billion), cementing India’s position as a key player in the global semiconductor ecosystem.
The Union Cabinet has approved four new semiconductor projects under the India Semiconductor Mission, taking the total approved projects to 10 with a cumulative investment of Rs. 1.60 lakh crore (US$ 18–19 billion). These include India’s first Silicon Carbide compound fab and an advanced packaging unit, strengthening domestic chip manufacturing and jobs.
The OECD has raised India’s FY26 GDP growth forecast to 6.7%, citing monetary and fiscal easing along with recent GST cuts, and expects inflation to ease to 2.9%. S&P Global has retained its FY26 growth outlook at 6.5%, supported by strong domestic demand and higher government investment, while trimming its inflation estimate to 3.2% and expecting a small RBI rate cut.
India and the UK have signed a Comprehensive Economic and Trade Agreement (CETA), providing duty-free access for 99% of India’s exports to the UK and expanding services market access in IT, finance, education, and digital trade. With bilateral trade at Rs. 4,83,784 crore (US$ 56 billion) and plans to double by 2030, the pact is expected to boost FDI flows, strengthen supply-chain linkages, and enhance India’s role in global trade.
Significant opportunities exist to deepen collaboration between Indian and Japanese firms in the textiles sector, with Tokyo-based companies expressing keen interest to invest in India, according to the Apparel Export Promotion Council (AEPC). Chairman of Apparel Export Promotion Council, Mr. Sudhir Sekhri, highlighted that numerous meetings have been held between Indian and Japanese apparel companies to explore potential business partnerships. Several Indian exporters are participating in the India Tex Trend Fair (ITTF) in Tokyo, a flagship textiles event inaugurated by Union Minister of Textiles Mr. Giriraj Singh. The fair is organised jointly by the Embassy of India, the Ministry of Textiles, AEPC, and the Japan India Industry Promotion Association (JIIPA). He urged Japanese firms to increase sourcing and investments in India, citing successful discussions with major brands such as Uniqlo, Adastria, Toray, Itokin, Broque Japan, Daiso, YKK, and Pegasus.
India has cleared Starlink to begin commercial satellite broadband services after final regulatory approval, capping subscriptions at two million users and targeting remote areas. As the third licensed satellite internet provider alongside OneWeb and Jio, Starlink’s entry highlights growing FDI participation in India’s space and digital connectivity ecosystem, supported by a liberalising regulatory environment.
India’s green warehousing capacity is set to quadruple to 270 million sq. ft by 2030, with institutional-grade sustainable warehouses emerging as a major investment theme, according to JLL India. With over 45% of global investor portfolios already green-certified, rising ESG standards and strong logistics demand are strengthening FDI inflows into India’s modern, sustainable warehousing and supply-chain infrastructure.
Prime Minister Narendra Modi inaugurated Micron Technology’s Semiconductor Assembly, Test, Marking and Packaging (ATMP) facility in Sanand, Gujarat, marking the start of commercial production and strengthening India’s position in the global semiconductor value chain. The facility reinforces India’s push under the Semicon India programme and Semiconductor Mission 2.0, supporting the country’s transition from software leadership to becoming a major global hardware and chip manufacturing hub.
India’s data centre sector is expected to attract Rs. 1,60,000–2,00,000 crore (US$ 18.67–23.33 billion) in investment over the next 5–7 years, supported by strong demand growth and accelerating capacity expansion, according to India Ratings and Research. With hyperscalers and global cloud firms driving large-scale deployments, India continues to emerge as a major destination for FDI in digital infrastructure and AI-ready facilities.
Thermal power investments in India are projected to rise to Rs. 2,30,000 crore (US$ 26.71 billion) by FY28, nearly doubling from recent years, with private sector participation expected to jump to about one-third of total funding, according to Crisil. With 80 GW of new thermal capacity planned by 2031–32, growing investor participation, especially from private players, signals renewed FDI interest in India’s power infrastructure alongside its clean-energy transition.
India retained its position as the world’s fourth-largest startup funding ecosystem in FY26, attracting Rs. 1.03 lakh crore (US$ 11.7 billion) across 1,632 rounds, supported by strong investor confidence in high-quality, fundamentals-driven businesses. Despite a decline in deal volumes, rising early-stage funding, a 50% increase in new unicorns, and a record 47 tech IPOs highlight the growing maturity and resilience of India’s startup ecosystem.
India achieved another record year in renewable energy during FY2025–26, adding the highest-ever 55.29 GW of non-fossil power capacity and taking the country’s total renewable energy installed capacity to 274.68 GW by March 2026. India also became the world’s third-largest market for renewable energy installed capacity, reinforcing its leadership in clean energy while strengthening its attractiveness for long-term investment in renewable infrastructure, manufacturing and green technologies.

Government Initiatives

In recent years, India has become an attractive destination for FDI because of favourable government policies. India has developed various schemes and policies that have helped boost India's FDI. These schemes have prompted India's FDI investment, especially in upcoming sectors such as defence manufacturing, real estate, and research and development. Some of the major government initiatives are:

On 30th June 2026, Eurobank launched a UPI-based remittance service for cross-border transfers from Greece to India in collaboration with NPCI International Payments Limited. The initiative will enable eligible customers to make faster and more secure transfers while significantly reducing transaction costs, further supporting the global expansion of India’s digital payments ecosystem.
On 13 May 2026, the Government announced the signing of a tripartite MoU between HD Korea Shipbuilding & Offshore Engineering (HD KSOE), National Shipbuilding & Heavy Industries Park, Tamil Nadu (NSHIP-TN), and Sagarmala Finance Corporation Limited (SMFCL) to develop India’s first mega greenfield shipyard at Thoothukudi, Tamil Nadu.
On April 13, 2026, the Government of Gujarat signed a Memorandum of Understanding (MoU) with Taiwan-based Allegiance International Co. to develop an Indo-Taiwan Industrial Park in the Sanand-Dholera region. The initiative aims to strengthen industrial cooperation between India and Taiwan while accelerating investments in semiconductor manufacturing, electronics production and other advanced technology sectors.
Gujarat has strengthened its position as an emerging AI and digital infrastructure hub with the signing of an MoU for a 250 MW green AI-ready data centre campus at Dholera SIR, involving an investment of Rs. 25,000 crore (US$ 2.75 billion).
India’s semiconductor ecosystem is witnessing strong momentum under the Semicon India Programme, with 10 approved projects involving investments of Rs. 1.6 lakh crore (US$ 17.78 billion), including fabs and advanced packaging units. The initiative is strengthening India’s end-to-end semiconductor value chain in line with the Atmanirbhar Bharat vision.
At the World Economic Forum (WEF) Davos 2026, Andhra Pradesh Chief Minister Mr. N. Chandrababu Naidu has received a significant investment commitment from the United Arab Emirates (UAE) to set up a food processing cluster in the state of Andhra Pradesh, marking the increasing attractiveness of India as a global investment destination.
Maharashtra signed 19 MoUs worth Rs. 14.50 lakh crore (US$ ~174 billion) at the World Economic Forum in Davos, reinforcing the state’s position as a key investment gateway. The agreements span green energy, food processing, steel, IT-ITeS, data centres, EVs, and digital infrastructure, and are expected to generate 15 lakh jobs, with further MoUs anticipated in AI, quantum computing, fintech, logistics, and renewable energy sectors.
India and the Philippines have joined forces to enhance their space and electronics industries, with the Satcom Industry Association-India (SIA-India) and the Electronic Industry Association of the Philippines Inc (EIAPI) signing an MoU to promote cooperation. This partnership aims to deepen industry-to-industry links and enable collaborative manufacturing, joint research, and innovation in satellite communication hardware, embedded systems, Internet of Things (IoT) devices, and space electronics.
Uttar Pradesh is rapidly emerging as a major investment destination, driven by tech-enabled governance reforms like Nivesh Mitra 3.0, which streamlines approvals through PAN-based authentication, single-window clearance, and real-time digital tracking. The platform enhances transparency, integration, and accessibility, especially for MSMEs, helping investors navigate the setup and growth process smoothly in the state.
Commerce & Industry Minister Mr. Piyush Goyal announced that the government is finalising a dedicated scheme to boost domestic toy manufacturing, strengthening design, quality, and branding capabilities. With exports rising to 153 countries and strong policy support, including quality standards and MSME cluster development, India’s evolving toy sector is increasingly attractive for FDI-led manufacturing partnerships and global value-chain integration.
Finance Minister Ms. Nirmala Sitharaman announced that the proposal to raise FDI limits in insurance to 100% is expected to lift sectoral growth to 7.1% annually over the next five years, attracting stable foreign capital and improving insurance penetration. Simplified ownership rules are set to enhance competition, technology transfer, and investor participation, reinforcing India’s reform-driven FDI policy environment in financial services.
India is advancing a Rs. 60,000 crore (US$ 6.94 billion) scheme to modernise 1,000 Industrial Training Institutes under a hub-and-spoke model, partnering with leading Indian and global companies to train two million youth over five years. With co-financing support from multilateral institutions, the initiative will expand India’s skilled workforce and further strengthen the country’s attractiveness for FDI in manufacturing and high-value industries.
The Union Cabinet has approved the Rs. 24,000 crore (US$ 2.79 billion) PM Dhan-Dhaanya Krishi Yojana to modernise agriculture across 100 districts from FY26, alongside expanding renewable energy investments through NTPC (Rs. 20,000 crore / US$ 2.33 billion) and NLC India (Rs. 7,000 crore / US$ 814.6 million). These initiatives strengthen India’s agricultural productivity and green-energy transition, reinforcing the country’s attractiveness for FDI in agri-value chains and clean-energy infrastructure.
Large-scale electronics and pharmaceutical manufacturing accounted for ~70% of total PLI disbursements in FY25, with electronics firms receiving Rs. 5,732 crore (US$ 666.3 million) and pharmaceuticals Rs. 2,328 crore (US$ 270.6 million) out of Rs. 10,114 crore (US$ 1.18 billion) released across 14 sectors. Introduced with a total outlay of Rs. 1,97,000 crore (US$ 22.90 billion), the PLI scheme is strengthening India’s manufacturing base and export competitiveness, key drivers for FDI inflows into high-value sectors. Electronics exports rose 32.46% in FY25 to Rs. 3,31,904 crore (US$ 38.58 billion), while pharmaceutical exports climbed 10% to Rs. 2,62,392 crore (US$ 30.5 billion), underscoring India’s growing role in global value chains.
India is strengthening its flagship AB PM-JAY health insurance scheme, now covering 1,961 procedures across 27 specialties and backed by over 1.77 lakh Ayushman Arogya Mandirs delivering primary care nationwide. By expanding access to affordable, quality healthcare, these reforms support social infrastructure and create a stronger foundation for FDI in healthcare services, life sciences, and medical technology.
As part of the Union Budget 2025-26, the government has raised the sectoral cap for the insurance sector from 74% to 100%. Additionally, an Investment Friendliness Index for states will be introduced this year. The government is also set to launch Jan Vishwas 2.0 to enhance the business environment further.
Government permits 100% Foreign Direct Investment via automatic route for Aircraft Maintenance, Repair and Overhaul (MRO).
The Union Cabinet approved the signing and ratification of a Bilateral Investment Treaty between India and the United Arab Emirates aiming to boost investor confidence, attract foreign investments, and create opportunities for overseas direct investment, potentially leading to job creation. Additionally, it is anticipated to stimulate investments in India, aligning with the vision of ‘Atmanirbhar Bharat’ by promoting domestic manufacturing, reducing import reliance, and boosting exports.
The Union Cabinet approved an amendment to the Foreign Direct Investment (FDI) policy concerning the Space Sector, aligning with the vision of ‘Atmanirbhar Bharat’ outlined by Prime Minister Mr. Narendra Modi. This amendment liberalised the Space sector, allowing 100% foreign direct investment in specified sub-sectors/activities. The reform is expected to improve the Ease of Doing Business in India, attract greater FDI inflows, and stimulate investment, income, and employment growth.
In line with the 'Atmanirbhar Bharat' vision, the Union Cabinet approved the PLI Scheme for White Goods (Air Conditioners and LED lights) with a budget of Rs. 6,238 crore (US$ 752 million) from FY 2021-22 to FY 2028-29. The scheme has approved 64 applicants, with a total committed investment of Rs. 6,766 crore (US$ 816 million).
FDI equity inflows in India's manufacturing sector have seen significant growth, particularly over the last decade. The government reports indicate a 69% increase in FDI equity inflows in the manufacturing sector from Rs. 8,37,191 crore (US$ 97.7 billion) during 2004-14 to Rs. 14,14,742 crore (US$ 165.1 billion) during 2014-24. This growth is attributed to various factors, including the Make in India initiative, Production-Linked Incentive (PLI) scheme, and India's overall economic growth.
The Government of India increased FDI in the defence sector by liberalizing it to 74% through the automatic route and 100% through the government route.
The Foreign Investment Facilitation Portal (FIFP) is a new online single-point interface of the government for investors to facilitate Foreign Direct Investment proposals to evaluate and further authorise them under the Government approval route.
The sectoral cap for the pharmaceutical industry has been lowered, 74% of FDI is permitted in the Brownfield pharma sector via the automatic method, and 100% is permitted via the approved route.
In the civil aviation sector, 100% FDI is allowed under automatic routes in brownfield airport projects.

Road ahead

Foreign Direct Investment continues to anchor India’s long-term growth trajectory, supported by sustained policy reforms, expanding market access, and deeper global economic integration. Recent strategic trade agreements and negotiations with key partners such as the United States, GCC, Israel, Brazil, and France, along with strengthened cooperation across defence, semiconductors, digital infrastructure, renewable energy, and advanced manufacturing, are widening export opportunities and reinforcing India’s role in global value chains. Rising investments in high-growth sectors such as semiconductors, AI-ready data centres, clean energy, and electronics, coupled with continued infrastructure scale-up, sectoral liberalisation, and digital transformation initiatives, are further enhancing India’s competitiveness and positioning the country as a preferred destination for strategic, long-term capital in the years ahead.