NEW DELHI, Dec 8: During the period from April 2000 to September 2024, India has achieved foreign direct investment (FDI) inflows exceeding USD one trillion, solidifying its position as a significant and secure investment hub on the global stage.
Data from the Department for Promotion of Industry and Internal Trade (DPIIT) indicates that the cumulative FDI, encompassing equity, reinvested earnings, and other capital, reached USD 1,033.40 billion within this timeframe.
Around 25 percent of this FDI originated from the Mauritius route, followed closely by Singapore (24 percent), the US (10 percent), the Netherlands (7 percent), Japan (6 percent), the UK (5 percent), UAE (3 percent), while the Cayman Islands, Germany, and Cyprus contributed 2 percent each.
During the review period, India attracted USD 177.18 billion from Mauritius, USD 167.47 billion from Singapore, and USD 67.8 billion from the US, according to the data.
The primary sectors drawing in these investments include services, computer software and hardware, telecommunications, trading, construction development, automobiles, chemicals, and pharmaceuticals.
As stated by the Commerce and Industry Ministry, India has attracted a cumulative FDI of USD 667.4 billion from 2014 to 2024, highlighting a significant increase of 119 percent compared to the previous decade (2004-2014).
“This influx of investment spans across 31 states and 57 sectors, promoting growth in various industries. Most sectors, with the exception of strategically significant areas, permit 100 percent FDI under the automatic route.
For the manufacturing sector, FDI equity inflows over the past decade (2014-24) amounted to USD 165.1 billion, reflecting a 69 percent rise from the previous decade (2004-14), which recorded inflows of USD 97.7 billion, according to official reports.
To maintain India’s appeal as an investor-friendly destination, the government continuously reviews FDI policies, implementing changes after extensive discussions with stakeholders.
Experts anticipate that overseas investments into India are expected to increase significantly in 2025, driven by strong macroeconomic performance, improved industrial output, and attractive Production Linked Incentive (PLI) schemes despite prevailing geopolitical challenges.
Despite global uncertainties, India remains a favored destination for investment, experts noted.
Avimukt Dar, Founding Partner at INDUSLAW, mentioned that the inflows are projected to persist robustly, especially in the tech sector, which is expected to see renewed private equity financing as many funds are poised to reinvest after successful exits in the public markets.
“The government should continue with structural reforms, particularly in areas like mergers and acquisitions, by encouraging SEBI to create a more favorable public takeover regime for foreign investors,” Dar stated.
According to Rumki Majumdar, an economist with Deloitte India, FDI inflows may remain moderate due to anticipated policy shifts in the US and the impact of policy changes affecting China’s economy.
Geopolitical conditions may redefine supply chains and trade regulations could dampen investor sentiment, leading to volatile capital flows. She highlighted the need for the government to prioritize infrastructure capital expenditure with timely project execution, enhance workforce skills through public-private partnerships and incentives, invest in digital ecosystems for productivity enhancements, and promote research and development for digital solutions that foster inclusion and formalization of the economy.
Commenting on the findings, Manav Nagaraj, Partner at Shardul Amarchand Mangaldas & Co, expressed confidence that FDI in India is set to grow across all sectors — from early-stage investments to growth capital and strategic investments.
“India’s historical appeal as an investment destination continues to attract foreign investors from various countries, including the US, UK, Europe, and Asia,” he noted.
FDI is generally permitted through the automatic route across most sectors, while sectors such as telecommunications, media, pharmaceuticals, and insurance require government approvals for foreign investments.
Under the government approval process, foreign investors must obtain preliminary consent from the relevant ministry or department, whereas investments under the automatic route only require the investor to notify the Reserve Bank of India (RBI) post-investment.
Currently, FDI is restricted in certain sectors, including lotteries, gambling, chit funds, Nidhi companies, real estate, and the manufacturing of tobacco products like cigars and cigarettes.
FDI is crucial for India as it seeks substantial investments in the infrastructure sector to stimulate growth. Healthy foreign inflows also contribute to maintaining the balance of payments and stabilizing the value of the rupee. (PTI)
