Foreign Direct Investment (FDI) in India has evolved significantly over the past decade. The country has steadily built a policy environment that has welcomed global capital across diverse sectors. It includes financial services, technology, manufacturing, and clean energy.
The numbers are compelling. Between April 2000 and March 2026, cumulative gross FDI inflows in India reached nearly US$1.16 trillion [1]. This marked an all-time milestone. In FY 2025-26, total FDI inflows rose to a record $94.53 billion, a 17% increase over the previous fiscal year [2].
A Decade of Record Growth
FDI inflows in India have grown steadily over the past decade. From $36.05 billion in FY 2013-14, inflows rose to $94.53 billion in FY 2025-26. Over the eleven years between 2014 and 2025, India attracted a total of $748.78 billion in FDI investment in India. This is 143% higher than the eleven years before [2].
This growth has been driven by consistent policy reforms. The government has opened most sectors to 100% FDI under the automatic route. This means investors no longer need prior government approval to invest. Some of the key milestones include allowing 100% Foreign Direct Investment (FDI) in coal mining and contract manufacturing. They also include raising the Foreign Direct Investment cap in insurance to 74% and bringing telecom under the automatic route. [3]. Most recently, the insurance sector cap has been proposed to be raised further to 100%, which is expected to draw in more international insurers [4].
India’s investor base has also widened considerably. The number of countries investing in India grew from 89 in FY 2013-14 to 112 in FY 2024-25, so this signifies the country’s growing appeal across geographies [2].
Who’s Investing? Top FDI countries in India
FDI investment in India comes from numerous countries, spanning both major financial centres and strategic bilateral partners. Singapore had the largest FDI investment in India- FDI equity inflows in the last fiscal year, contributing US$19.8 billion. The United States was also one of the top FDI countries in India followed at US$11.17 billion. Additionally, Mauritius contributed US$3.5 billion [4].
Interestingly, the inflows from the US have more than doubled in the last financial year, reflecting the deepening investment relationship between the two economies. On a cumulative basis since April 2000, Singapore leads with nearly $194.7 billion in equity inflows, followed by Mauritius at $186.8 billion and the United States at $81.8 billion [4].
To further strengthen these ties, India is actively negotiating Bilateral Investment Treaties (BITs) with partners including Saudi Arabia, Qatar, the European Union, Switzerland, and Australia. This is aimed at offering greater legal certainty and protection to international investors [5].
Top Recipient Sectors: Where’s Foreign Investment Flowing
Foreign investment is no longer concentrated in a handful of sectors. Global capital today is flowing across a broad range of industries, reflecting the scale and diversity of India’s economic opportunity.
Recent FDI trends in India indicate a clear shift towards manufacturing, electronics, renewable energy, digital infrastructure and high-value technology sectors.
-
Computer Software and Hardware
The country’s technology sector has emerged as the single largest destination for FDI equity in FY 2025-26, attracting $13.9 billion, a sharp increase from $7.8 billion in FY 2024-25 [5]. Since April 2000, computer software and hardware’s cumulative inflows amount to approximately $121.40 billion, reflecting the sector’s long-term significance in India’s investment story [4]. Global technology companies continue to deepen their presence in India. Microsoft’s $3 billion commitment to expand cloud and AI infrastructure in India is a recent example of this confidence [6].
-
Services Sector
The services sector remained a key destination for FDI equity in FY 2025-26, attracting $10 billion in inflows [5]. As defined by the Department for Promotion of Industry and Internal Trade (DPIIT), this sector covers financial services, banking, insurance, business outsourcing, R&D, and technology testing. Since April 2000, the sector has cumulatively attracted approximately $127.26 billion in FDI equity, making it one of the largest recipients over the past two and a half decades [4].
-
Manufacturing
Manufacturing continues to be one of the fastest-growing areas of Foreign Direct Investment in India. Higher inflows into automobiles, pharmaceuticals, and infrastructure-related sectors point to increasing confidence in India's industrial capabilities. [5]. The primary driver has been the Government's Production Linked Incentive (PLI) Scheme, which provides performance-based financial incentives across 14 sectors including electronics, pharmaceuticals, automobiles, textiles, and renewable energy.
As of March 2026, PLI schemes had approved 892 applications across sectors. They attracted cumulative investments of ₹2.4 lakh crore and generated production and sales worth ₹22.66 lakh crore. Mobile phone production in India reached US$75 billion in the last financial year. Exports were estimated at approximately US$35 billion, consolidating India's position as the world's second-largest smartphone producer. The PLI framework has also attracted major semiconductor investments [8]. These include Micron Technology's US$2.75 billion plant in Gujarat and NXP Semiconductors' US$1 billion commitment to R&D in India. [8].
-
Trading and Telecommunications
Trading accounted for 7% of cumulative FDI equity inflows since April 2000, amounting to approximately $50.93 billion [4]. Meanwhile, the telecommunications sector has been a significant long-term recipient with cumulative inflows of approximately $40.18 billion since April 2000 [4]. The country now boasts the second-largest 5G market globally with over 400 million 5G subscribers. The telecom sector’s gross revenue has risen from $39.22 billion in FY 2023-24 to $43.42 billion in FY 2024-25 [4].
-
Renewable Energy
Renewable energy is one of the fastest-growing sectors for Foreign Direct Investment in India. The sector attracted US$3.4 billion in FDI in FY 2024–25, eight times that of FY 2020–21. Its share of total FDI inflows in India also rose from approximately 1% in FY21 to around 8% in FY25. [9]. The country added a record 44.51 GW of renewable capacity by November 2025. This brought the total installed renewable capacity to 253.96 GW, the fourth largest in the world. [10].
Additionally, India's solar PV module manufacturing capacity has surged to 210 GW as of December 2025, up from 120 GW in June 2025. This growth has been driven by the PLI scheme for high-efficiency solar modules [10]. Looking ahead, the country’s renewable energy sector is projected to attract over $250 billion in investments by 2030 [4].
India in the Global FDI Rankings
India’s standing in global investment rankings continues to improve, reinforcing its position as one of the largest FDI investment destinations in the world. According to UNCTAD's World Investment Report 2025, India moved up to 15th position globally among FDI destinations in 2024, from 16th the previous year. This improvement came even as global FDI flows fell by 11%. [11].
In addition to that, India ranked fourth globally in greenfield project announcements, with 1,080 new projects in 2024. Capital expenditure in greenfield projects also surged over 25% to US$110 billion, accounting for nearly one-third of all Asian greenfield investment. [11] [12]. Within South Asia, India indeed remained the leading FDI recipient, with equity inflows during April-December 2025 rising to $47.87 billion from $40.67 billion in the same period the previous year [4].
Future Outlook
Several strong tailwinds point to continued FDI growth for India in the coming years. The global China+1 shift in supply chains is benefiting the country significantly, especially in electronics, semiconductors and pharmaceuticals sectors. The PLI scheme is increasingly seen internationally as a credible and effective model for drawing in manufacturing investment [7].
Semiconductors represent a particularly important frontier. The India Semiconductor Mission, backed by an outlay of ₹76,000 crore ($8.79 billion), is building out the country’s chip design and fabrication capacity. Six projects are already in advanced stages of execution, with four more recently approved [9]. The country’s semiconductor market is projected to reach $63 billion by 2026 [8].
Digital infrastructure is another growth area. GCC leasing in India is projected at approximately 180 million square feet between 2025 and 2030. This translates to an average of nearly 30 million square feet annually [4].
On the diplomatic front, the country’s BIT programme is also gathering momentum. India has already concluded treaties with the UAE (effective August 2024) and Uzbekistan (September 2024). It is also in active negotiations with over a dozen more countries, reinforcing the legal protections available to foreign investors [5].
Finally, the Union Budget 2025-26 raised total PLI scheme allocations by 76%. Electronics and IT hardware receiving ₹9,000 crore and textiles seeing a 25-fold increase. This is a clear signal of the government’s intent to sustain the manufacturing investment momentum [3].
Conclusion
In conclusion, India’s FDI story is not just of rising numbers but a story of deliberate transformation. It also reflects the country's emergence as one of the largest FDI investment destinations for global investors. The evolution from a services- and IT-centric investment destination to a diversified, manufacturing-forward economy reflects the success of a cohesive policy agenda. This agenda is built around liberalisation, performance-linked incentives, and strategic diplomacy.
