India has received $1 trillion in cumulative foreign direct investment (FDI) inflows since April 2000, establishing the country's growing appeal as a global investment destination.
In the first half of fiscal year 2024-25, FDI inflows increased by 26% to $42.1 billion, which shows the impact of investor-friendly policies and an active business environment, according to a statement issued by the Ministry of Commerce & Industry on Thursday.
According to data from the Department for Promotion of Industry and Internal Trade (DPIIT), nearly sixty-nine per cent of the total FDI inflows over the past twenty-four years were recorded in the last decade (April 2014 to September 2024), amounting to $709.84 billion.
“This trend highlights India’s strategic position in the global economic landscape, bolstered by transformative policy initiatives such as 'Make in India' and the Goods and Services Tax (GST),” the ministry said in the statement.
As per the DPIIT data, about twenty-five per cent of the FDI came through the Mauritius route, followed by Singapore (twenty-four per cent), the US (ten per cent), the Netherlands (seven per cent), Japan (six per cent), the UK (five per cent), and the UAE (three per cent). Cayman Islands, Germany, and Cyprus accounted for two per cent each.
During FY2023-24, the services sector, encompassing finance, banking, insurance, outsourcing, R&D, and technology testing, emerged as the leading recipient of FDI equity inflows, accounting for sixteen per cent of the total, the DPIIT data showed. It was closely followed by computer software and hardware at fifteen per cent, trading at six per cent, telecommunications also at six per cent, and the automobile industry at five per cent, as per the data.
In terms of regional distribution, Maharashtra led the states with 30% of the FDI equity inflow, followed by Karnataka (22%), Gujarat (17%), Delhi (13%), and Tamil Nadu (5%), it said.
India’s rising global competitiveness has been reflected in its improved rankings. In the 2024 World Competitiveness Index, India secured the fortieth position, up from forty-third in 2021. Similarly, it climbed from eighty-first in 2015 to fortieth in the 2023 Global Innovation Index.
As the third-largest recipient of greenfield project announcements in 2023, India saw one thousand and eight projects initiated. It also ranked second globally in international project finance deals, with a sixty-four per cent rise in such transactions, it said, citing the World Investment Report.
India also improved its business environment, advancing from one hundred and forty-second in 2014 to sixty-third in the World Bank’s Doing Business Report (DBR) 2020, released in October 2019 before the report was discontinued, it said.
As things are, India's FDI framework allows for 100% foreign ownership in most sectors via the automatic route, with a few exceptions for major sectors. Recent revisions to the Income Tax Act, such as the elimination of the angel tax and lower tax rates for foreign corporations, have aided in recruiting FDIs. The government has also opened up growing areas such as space and defence to more foreign investment.
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