India FDI Inflow Tracker: Which Countries & Sectors Are Investing Most

India's FDI Performance: FY 2024-25 in Context

India's Foreign Direct Investment inflows reached USD 81.04 billion in FY 2024-25, marking a 14% increase from USD 71.28 billion in FY 2023-24. This is the highest inflow recorded in the last three financial years, signalling a recovery from the post-pandemic correction that saw FDI dip in FY 2022-23 and FY 2023-24.

Cumulative FDI inflows from April 2000 to December 2025 stand at USD 1.14 trillion, with FDI equity inflows of USD 776.75 billion. Investment has come from more than 170 countries into 63 sectors across all 33 states and union territories. The first half of FY 2025-26 saw USD 50.36 billion in total FDI — a 16% increase over the same period in FY 2024-25, indicating continued momentum.

For foreign companies considering India entry through a wholly-owned subsidiary or branch office, understanding where this capital is flowing — by country of origin, sector, and state — provides strategic intelligence for market entry decisions.

Top Source Countries: Where the Capital Originates

Cumulative FDI by Source Country (April 2000 - December 2025)

Why Singapore and Mauritius Lead

Singapore and Mauritius collectively account for nearly half (49%) of all cumulative FDI into India. This is not because Singaporean and Mauritian companies are the largest investors — rather, these jurisdictions serve as holding company and investment routing hubs. Multinational corporations from the US, Europe, Japan, and other countries establish intermediate holding entities in Singapore and Mauritius to benefit from:

• Favourable DTAA provisions: Both countries have comprehensive tax treaties with India that provide reduced withholding tax rates on dividends, interest, and royalties
• Capital gains treatment: Though the India-Mauritius DTAA was amended in 2016 (and further by the MLI), Singapore's treaty still offers advantages for certain investment structures
• Holding company infrastructure: Both jurisdictions have well-developed legal frameworks for holding company operations, with Singapore increasingly preferred post-GAAR implementation

For companies evaluating routing structures, our article on Singapore as an FDI routing hub after GAAR and MLI provides detailed analysis.

FDI Source Countries in FY 2024-25

Q1 FY 2025-26: Emerging Trends

In Q1 FY 2025-26, total FDI inflows surged 15% year-on-year to USD 18.62 billion. The United States emerged as a particularly strong contributor, with USD 5.61 billion — almost triple its USD 1.50 billion contribution in Q1 FY 2024-25. This reflects increased US corporate investment in India's technology and services sectors, particularly through GCC expansion. For companies investing from the United States, understanding the India-US DTAA provisions and FATCA implications is critical.

Sector-Wise FDI Distribution

FDI Equity Inflows by Sector (FY 2024-25)

Services Sector: 40% Growth

The services sector reclaimed its position as the top FDI recipient in FY 2024-25, with inflows rising 40.77% to USD 9.35 billion from USD 6.64 billion the previous year. This includes financial services, business consulting, engineering services, and outsourcing. For foreign companies in professional services, our FDI advisory services cover sector-specific entry strategies.

Computer Software & Hardware

Technology continues to attract significant FDI at 16% of total equity inflows. In Q1 FY 2025-26, the sector attracted USD 5.4 billion, driven by GCC establishment, cloud infrastructure investment, and AI/ML operations. This sector benefits from 100% FDI under the automatic route with no sectoral caps.

Manufacturing: 18% Growth

Manufacturing FDI grew 18% in FY 2024-25 to USD 19.04 billion, reflecting India's positioning as an alternative manufacturing hub amid supply chain diversification away from China. Key manufacturing subsectors attracting FDI include:

• Automobiles: USD 1.29 billion in Q1 FY 2025-26, driven by EV supply chain investments
• Pharmaceuticals: Benefiting from CDSCO fast-track approvals for contract manufacturing
• Electronics: PLI scheme driving smartphone and component manufacturing investment
• Textiles and apparel: Increasing FDI as brands diversify production from Bangladesh and Vietnam

For sector-specific FDI guidance, see our articles on sectors where India offers better FDI terms than China and Vietnam and the complete list of FDI sectoral caps.

Sectors With FDI Restrictions

While most sectors permit 100% FDI under the automatic route, several critical sectors maintain caps or require government approval:

For a comprehensive comparison of investment routes, see our comparison of automatic route vs government approval route.

State-Wise FDI Distribution

Top States Receiving FDI in FY 2024-25

Maharashtra and Karnataka together accounted for 51% of India's total FDI in FY 2024-25. This concentration reflects the dominance of Mumbai's financial hub and Bengaluru's technology ecosystem. However, the trend is shifting — in Q1 FY 2025-26, Karnataka led with USD 5.69 billion, followed closely by Maharashtra at USD 5.36 billion, and Tamil Nadu at USD 2.67 billion.

Strategic State Selection for Foreign Companies

For foreign companies choosing where to establish operations, FDI concentration data should be combined with other factors:

• Maharashtra (Mumbai/Pune): Financial services, media, corporate headquarters, and manufacturing. Strongest financial and legal infrastructure.
• Karnataka (Bengaluru): Technology, GCCs, startups, deep-tech. Home to 52 unicorns and the largest concentration of technology talent.
• Gujarat (Ahmedabad/GIFT City): Manufacturing, chemicals, petrochemicals. GIFT City IFSC offers regulatory advantages for financial services companies.
• Tamil Nadu (Chennai): Automotive, manufacturing, IT services. Well-established industrial corridors and port infrastructure.
• Telangana (Hyderabad): Technology, pharma, life sciences. Competitive cost structure relative to Bengaluru with strong talent availability.

See our article on Indian states competing for foreign investment for a deeper analysis of state-level incentives and infrastructure.

Recent FDI Policy Reforms (2025-2026)

India has implemented several significant FDI policy changes that affect the investment landscape:

March 2026: Neighbouring Country FDI Rules Eased

On March 11, 2026, the Union Cabinet approved changes to FDI policy for countries sharing a land border with India (China, Bangladesh, Nepal, Bhutan, Pakistan, Myanmar, Afghanistan). Under the revised policy:

• Investors from neighbouring countries can now hold up to 10% beneficial ownership in Indian companies through the automatic route
• A 60-day approval timeline has been introduced for applications exceeding the 10% threshold
• This eases the restrictions imposed by Press Note 3 of 2020, which required government approval for all investments from neighbouring countries — a policy originally targeting Chinese acquisitions during the pandemic

December 2025: Insurance Sector Opened to 100% FDI

The Sabka Bima Sabki Raksha amendment to insurance legislation, adopted on December 21, 2025, allows 100% foreign direct investment in the insurance sector — up from the previous 74% cap. This opens significant opportunities for global insurance companies seeking full ownership of Indian operations.

SEBI SWAGAT-FI Framework (Effective June 2026)

On December 1, 2025, SEBI notified the SWAGAT-FI regulations — a unified digital gateway for eligible foreign investors that will function as a single-window onboarding and compliance portal. Effective from June 1, 2026, this framework will simplify the regulatory process for FDI and FPI entering Indian markets.

Defence Sector FDI at 74%

FDI in the defence sector is now permitted up to 74% through the automatic route (previously 49% automatic, with government approval required above 49%). This has driven increased investment in defence manufacturing, particularly from US, European, and Israeli companies. See our detailed guide on defence manufacturing FDI in India.

FDI Reporting and Compliance Obligations

Once foreign investment enters India, companies must comply with a series of reporting obligations:

Mandatory Filings

Consequences of Non-Compliance

FEMA penalties for non-compliance with FDI reporting can reach up to three times the amount involved in the contravention, or INR 2 lakh for every day the violation continues, whichever is higher. Late filing of FC-GPR is one of the most common compliance failures — see our article on the cost of missing the FC-GPR deadline.

For comprehensive FDI reporting and compliance management, our FEMA and RBI compliance services handle all filings, deadline tracking, and regulatory correspondence.

FDI Outlook: What's Next

Several factors will shape India's FDI trajectory in 2026-27:

• China+1 strategy: Continued supply chain diversification from China is driving manufacturing FDI into India, particularly in electronics, automotive components, and pharmaceuticals
• EFTA-India TEPA: The trade and economic partnership agreement includes a USD 100 billion FDI pledge from EFTA countries (Switzerland, Norway, Iceland, Liechtenstein) over 15 years
• GCC expansion: Global Capability Centres continue to grow, with 1,600+ already operating and new centres being established at an accelerating pace
• PLI schemes: Production-Linked Incentive schemes across 14 sectors continue to attract manufacturing FDI with performance-based subsidies
• Infrastructure investment: India's National Infrastructure Pipeline (INR 111 lakh crore) creates opportunities in infrastructure, logistics, and construction

For companies evaluating India entry timing, the current policy environment is increasingly favourable — the March 2026 easing of neighbouring country rules, 100% insurance FDI, and the upcoming SWAGAT-FI single window all reduce barriers.

FDI and the Make in India Initiative

The Make in India initiative, launched in 2014 and now in its second phase, has fundamentally reshaped India's manufacturing FDI landscape. The Production-Linked Incentive (PLI) scheme, covering 14 sectors with a total outlay of INR 1.97 lakh crore (approximately USD 24 billion), provides performance-based subsidies that significantly improve the return on manufacturing investments. Key PLI sectors include mobile phones and electronics (INR 40,951 crore), automotive and auto components (INR 25,938 crore), advanced chemistry cell batteries (INR 18,100 crore), and pharmaceuticals (INR 15,000 crore). Foreign companies in these sectors can combine PLI incentives with state-level investment subsidies, special economic zone benefits, and favourable DTAA provisions to optimise their investment structure.

Our FDI advisory team provides current assessments of sector-specific opportunities, PLI eligibility, and regulatory requirements for foreign companies entering India.

FDI vs FPI: Understanding the Capital Flow Structure

Foreign investment into India flows through two primary channels: FDI (Foreign Direct Investment) and FPI (Foreign Portfolio Investment). Understanding the distinction is critical for structuring investments correctly and avoiding regulatory complications.

FDI involves acquiring 10% or more equity in an Indian company, with the intent of establishing a lasting interest and exercising management influence. FPI involves portfolio investments — equity, debt, and derivative instruments — through stock exchanges, typically with less than 10% ownership in any single company. FDI is governed by the Consolidated FDI Policy and FEMA regulations, while FPI is regulated by SEBI through the FPI Regulations, 2019.

In FY 2024-25, gross FPI inflows into Indian equity markets reached approximately USD 42.5 billion, though net FPI flows were volatile due to periods of significant outflows. FDI, by contrast, represents more stable, long-term capital commitment. Foreign companies planning India entry should evaluate whether their investment structure qualifies as FDI or FPI, as the compliance obligations, reporting requirements, and tax treatment differ substantially. For a detailed comparison, see our guide on FDI vs FPI.

Round-Tripping and GAAR Considerations

India's General Anti-Avoidance Rule (GAAR), effective since April 2017, targets arrangements whose primary purpose is to obtain a tax benefit. Foreign companies routing investments through treaty jurisdictions (Mauritius, Singapore, Netherlands) must ensure that the intermediate entity has genuine commercial substance — not merely a tax-motivated structure. The round-tripping and GAAR implications article provides detailed guidance on structuring compliant investment flows.

Key Takeaways

• India recorded USD 81.04 billion in total FDI in FY 2024-25, a 14% increase YoY, with cumulative inflows crossing USD 1.14 trillion since April 2000
• Singapore (25%) and Mauritius (24%) are the top source countries by cumulative FDI, primarily serving as routing hubs for global investors — the US emerged as a particularly strong direct investor in Q1 FY 2025-26 with USD 5.61 billion
• Services (19%) and computer software/hardware (16%) lead sector-wise, with manufacturing FDI growing 18% to USD 19.04 billion as companies diversify supply chains from China
• Maharashtra (31%) and Karnataka together attracted 51% of FDI in FY 2024-25, though Karnataka is closing the gap and Tamil Nadu is gaining ground
• Recent policy reforms are investor-positive: 100% insurance FDI (December 2025), eased neighbouring country rules with 10% automatic route (March 2026), and the SWAGAT-FI single-window portal (June 2026)