How FDI can unlock India's consumption economy and power MSME growth
- IBEF
- November 19, 2025
Foreign direct investment (FDI) has emerged as a key driver of India’s economic growth, combining capital and technology to build capacity across sectors. Over the past decade, India has progressively liberalised FDI policies in defence, insurance, and single-brand retail, attracting record inflows that have more than doubled from around Rs. 3,18,888 crore (US$ 36 billion) in FY14 to over Rs. 7,08,640 crore (US$ 80 billion) in FY24. These reforms have strengthened global confidence in India’s long-term growth, positioning the country among the leading investment destinations worldwide. As India deepens trade partnerships, FDI is helping expand production, boost exports, and create quality jobs, while also strengthening competitiveness through improved infrastructure and integrated value chains.
FDI is also unlocking the potential of India’s consumption economy. Rising digital inclusion, expanding urban and semi-urban demand, and widespread e-commerce access are enabling nearly 1.6 million micro, small, and medium enterprises (MSMEs) to reach new markets efficiently. Investment in logistics, warehousing, cold chains, and digital retail platforms is reducing costs, formalising transactions, and linking small producers with consumers nationally and internationally. Digital platforms have generated 15.8 million jobs, including 3.5 million for women, while enhancing access to insurance and welfare benefits. Sustained reforms and continued FDI inflows are critical to building shared infrastructure, strengthening domestic manufacturing and logistics, and supporting the growing consumption class. By fostering inclusive growth, India is laying the foundation for a Viksit Bharat, with e-commerce and FDI reforms serving as cornerstones of a future-ready economy.
Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.
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