Foreign direct investment (FDI) inflows into India surpassed the USD 1 trillion mark during the period from April 2000 to September 2024, solidifying the nation’s position as a secure and key investment destination globally.
Data from the Department for Promotion of Industry and Internal Trade (DPIIT) indicates that the cumulative FDI inflow, comprising equity, reinvested earnings, and other capital, amounted to USD 1,033.40 billion during this period.
Approximately 25% of these inflows were routed through Mauritius, followed by Singapore (24%), the United States (10%), the Netherlands (7%), Japan (6%), the United Kingdom (5%), the UAE (3%), and 2% each from the Cayman Islands, Germany, and Cyprus. Specifically, India received USD 177.18 billion from Mauritius, USD 167.47 billion from Singapore, and USD 67.8 billion from the United States.
Key sectors attracting the highest FDI inflows include services, computer software and hardware, telecommunications, trading, construction development, automotive, chemicals, and pharmaceuticals.
Between 2014 and 2024, India attracted a cumulative FDI inflow of USD 667.4 billion, representing a 119% increase compared to the preceding decade (2004–2014), according to the Commerce and Industry Ministry.
These investments spanned 31 states and 57 sectors, driving growth across diverse industries. Most sectors, except strategically significant ones, are open to 100% FDI under the automatic route.
FDI equity inflows into the manufacturing sector during 2014–2024 reached USD 165.1 billion, a 69% increase compared to USD 97.7 billion in the previous decade (2004–2014).
The Indian government regularly reviews FDI policies to maintain an investor-friendly environment, incorporating changes based on consultations with stakeholders.
Experts predict an uptick in overseas inflows in 2025, supported by robust macroeconomic performance, improved industrial output, and attractive production-linked incentive (PLI) schemes, even amidst geopolitical challenges.
Avimukt Dar, Founding Partner at INDUSLAW, expects FDI inflows to remain strong, with private equity financing in the tech sector poised for recovery due to successful fund exits in public markets.
Dar suggests that the government should advance structural reforms in mergers and acquisitions (M&A) by urging SEBI to create a more foreign-investor-friendly public takeover regime.
Rumki Majumdar, an economist at Deloitte India, noted that while FDI inflows are likely to remain stable, global factors such as US policy shifts and China’s economic stimulus measures could affect capital flows. She emphasised the need for the Indian government to prioritise infrastructure investment, improve workforce skilling through public-private partnerships, enhance digital ecosystems, and foster research and development to drive inclusion and formalise the economy.
Manav Nagaraj, Partner at Shardul Amarchand Mangaldas & Co, highlighted that India remains an attractive destination for foreign investors across various regions, including the US, UK, Europe, and Asia, with continued growth expected in early-stage investments, growth capital, and strategic investments.
FDI is permitted via the automatic route in most sectors. However, sectors such as telecoms, media, pharmaceuticals, and insurance require prior government approval.
Under this route, foreign investors must obtain approval from the relevant ministry, while the automatic route requires post-investment notification to the Reserve Bank of India (RBI).
FDI is prohibited in specific sectors, including lotteries, gambling and betting, chit funds, Nidhi companies, real estate businesses, and the manufacture of tobacco-based products such as cigars, cheroots, and cigarettes.
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