India has achieved an important milestone in its economic development with FDI inflows into the country crossing the $1 trillion mark from April 2000 to September 2024. This indicates India’s growing stature as a leading global investment destination.The total FDI, equity, reinvested earnings, and other forms of capital, stands at a strong $1.033 trillion as per the Department for Promotion of Industry and Internal Trade (DPIIT) data. This reflects that India is very well-positioned in the world and provides a robust environment for foreign investments.
FDI Inflows By Country
A closer look at the sources of FDI reveals a diverse range of countries contributing to India’s economic growth. The largest portion of FDI came through Mauritius, accounting for 25%, followed closely by Singapore at 24%. Other major investors included the United States (10%), the Netherlands (7%), and Japan (6%). The United Kingdom, UAE, Cayman Islands, Germany, and Cyprus also made significant contributions. Notably, Mauritius led the pack with an FDI inflow of $177.18 billion, while Singapore contributed $167.47 billion, and the U.S. provided $67.8 billion.
The services sector still remains the largest recipient of FDI, followed by computer software and hardware, telecommunications, trading, construction development, automobiles, chemicals, and pharmaceuticals. These sectors form the core of India’s economic landscape, and the inflow of foreign capital into these sectors supports the nation’s modernization and industrial growth.
Manufacturing Sector Growth
India’s manufacturing sector has also experienced significant growth in FDI, with equity inflows amounting to $165.1 billion over the last ten years (2014-2024). This is a 69% increase from the previous decade, indicating the increasing confidence of foreign investors in India’s manufacturing capabilities. The country’s infrastructure and policy framework are expected to be enhanced further, and the manufacturing sector is likely to take center stage in the economy.
The Indian government has performed an important function in framing a conducive environment for investments by periodically revising the FDI policy. Through this, the country stays attractive to the foreign investor. It provides security and promotes a friendly investment climate for the foreign investors. Such consultation with various stakeholders has helped the policies evolve through the changing demands of the global investment fraternity.
India’s Path To Sustainable Growth
According to experts, despite global uncertainties, India’s FDI inflows will continue to do well in the coming years. Avimukt Dar, Founding Partner of INDUSLAW, believes that there will be a strong growth trajectory, particularly in the tech sector, which has seen a resurgence in private equity financing. The healthy exits experienced by various funds in the public markets are expected to boost investments in India’s technology landscape.
According to economist Rumki Majumdar of Deloitte India, geopolitical tensions and possible policy changes in the US and China may create volatility in global capital flows. She suggests that the Indian government should focus on infrastructure investments, workforce development, and R&D to sustain the momentum of FDI growth.
FDI remains crucial for India’s economic growth, especially as the country faces growing infrastructure needs. Foreign investments help bridge the gap in capital requirements and are vital for maintaining balance of payments and supporting the rupee’s value.
ALSO READ | Bharat Progress Report: India Set To Lead Maritime Innovation As IMHC 2024 Explores Global Impact
