Quarterly FDI Tracker India: Sector-Wise Inflows, Trends & Analysis

India's FDI Performance: The Numbers That Matter

India's foreign direct investment trajectory reached a significant milestone in FY 2024-25, with total FDI inflows (equity + reinvested earnings + other capital) touching USD 81.04 billion — a 14% increase from USD 71.28 billion in FY 2023-24, according to DPIIT data. FDI equity inflows alone stood at USD 55.61 billion, while reinvested earnings contributed an additional USD 19.85 billion, signalling that existing investors are doubling down on their India operations rather than repatriating profits.

The momentum has accelerated into FY 2025-26. Through the first nine months (April-December 2025), FDI equity inflows reached Rs 4,16,709 crore (USD 47.87 billion), up 22% from Rs 3,40,962 crore (USD 40.67 billion) in the corresponding period of the previous year. If this pace holds, FY 2025-26 is on track to surpass USD 90 billion in total FDI — a new record.

For foreign companies considering India market entry, these numbers represent more than macroeconomic data points. They indicate which sectors are attracting capital, which countries are leading the investment charge, and where the government is creating policy incentives that make specific sectors more attractive for new entrants.

India's cumulative FDI crossed the USD 1 trillion mark in FY 2024-25 (measured from April 2000), making it one of the top five global FDI destinations. For context, India received more FDI in a single quarter of FY 2025-26 than the entire annual FDI flow of most Southeast Asian economies. Understanding where this capital is flowing — and where it is not — is essential for strategic market entry planning.

Quarterly Breakdown: FY 2025-26

DPIIT releases FDI data with a one-quarter lag. Here is the available quarterly breakdown for FY 2025-26, based on the latest published factsheets:

Q1 FY 2025-26 (April-June 2025)

FDI equity inflows in Q1 reached USD 18.62 billion, a 15% increase over USD 16.17 billion in Q1 FY 2024-25. The quarter was marked by a dramatic surge in US-origin investment and continued strength in the IT sector.

H1 FY 2025-26 (April-September 2025)

FDI inflows rose to USD 35.2 billion in H1 FY26, an 18% increase over USD 29.8 billion in H1 FY25. The IT sector saw its inflows roughly double compared to the previous year, driven by large-ticket investments in cloud infrastructure, AI data centres, and semiconductor design.

9-Month Cumulative (April-December 2025)

Through December 2025, cumulative FDI equity inflows reached USD 47.87 billion, representing a robust 22% year-on-year expansion. The acceleration in Q3 (October-December) suggests sustained momentum heading into the final quarter of FY 2025-26.

Sector-Wise FDI Inflows: Where the Money Is Going

Understanding sector-wise FDI distribution is critical for foreign companies evaluating entry strategies. The sector you invest in determines whether you need the automatic route or government approval route, the regulatory agencies you interact with, and the compliance burden you carry.

Top Sectors by FDI Equity (FY 2024-25)

Key Sector Trends

Services sector surge (+40.8%): The financial services sector saw its FDI nearly double, driven by insurance sector liberalization (FDI limit increased to 74% in 2021, with further increase to 100% announced in Budget 2025) and growing demand for India-based R&D centres. Companies setting up branch offices or wholly owned subsidiaries in financial services should note that most sub-sectors now permit 100% FDI under the automatic route.

IT sector resilience: Computer software and hardware attracted USD 8.89 billion, with Q1 FY 2025-26 alone contributing USD 5.4 billion — a pace that suggests the sector could exceed USD 20 billion for the full year. AI infrastructure, cloud computing, and semiconductor design are the primary drivers.

Manufacturing comeback: The manufacturing sector grew 18% to USD 19.04 billion in FY 2024-25, supported by Production Linked Incentive (PLI) schemes across 14 sectors. The government increased PLI allocations significantly in Budget 2025-26, with electronics and IT hardware seeing a jump from Rs 5,777 crore to Rs 9,000 crore and automobiles from Rs 347 crore to Rs 2,819 crore.

Automobile sector acceleration (+22.1%): EV manufacturing, battery technology, and auto component suppliers are driving FDI growth. India's PLI scheme for advanced chemistry cell (ACC) battery storage has attracted commitments of over Rs 45,000 crore from domestic and international players.

Pharmaceuticals steady growth (+6.8%): India's pharmaceutical sector attracted USD 2.12 billion in FDI equity in FY 2024-25. The brownfield pharma route (100% FDI under automatic route for greenfield, 74% under automatic for brownfield with government approval above 74%) continues to attract global pharma companies establishing manufacturing and R&D bases. India's cost advantage in API manufacturing and the government's Bulk Drug Parks scheme are key draws.

Construction and infrastructure (+18.5%): FDI in construction development activities rose to USD 2.78 billion, driven by data centre construction, industrial park development, and logistics infrastructure. Companies entering this sector should note that construction development (townships, built-up infrastructure) permits 100% FDI under automatic route, subject to minimum area and investment thresholds.

Cumulative Sector Performance (April 2000-December 2025)

Over the 25-year period since FDI data tracking began, the top sectors by cumulative equity inflows tell a different story:

Top Investing Countries: Source-Wise Analysis

The geographic origin of FDI flows into India reveals important patterns about routing structures, Double Taxation Avoidance Agreements (DTAAs), and strategic investment corridors.

FY 2024-25 Country Rankings

Q1 FY 2025-26 Shift

The most notable shift in Q1 FY 2025-26 was the United States emerging as one of the top investors with USD 5.61 billion — nearly tripling its Q1 FY25 contribution of USD 1.50 billion. This reflects large-ticket tech investments by US companies in AI infrastructure and data centres. Singapore maintained its lead with USD 4.59 billion, while Mauritius contributed USD 2.08 billion.

Understanding the Singapore-Mauritius Dynamic

Singapore and Mauritius together account for 47% of India's FDI. This does not mean Singaporean and Mauritian companies are India's largest investors — rather, these jurisdictions serve as holding company hubs through which investments from multiple countries are routed. Singapore offers a comprehensive DTAA with India, no capital gains tax on sale of Indian shares (with conditions), and a robust legal framework for holding structures. Mauritius historically offered similar advantages, though the 2016 amendment to the India-Mauritius DTAA introduced capital gains taxation on shares acquired after April 2017, reducing its tax advantage.

For foreign companies deciding where to structure their India investment, the choice between routing through Singapore, Mauritius, the Netherlands, or investing directly from the home country depends on DTAA provisions, withholding tax rates on dividends and royalties, and the specific treaty benefits available. Our FDI advisory service can help evaluate the optimal structure.

State-Wise FDI Distribution

FDI in India is heavily concentrated in a few states, driven by infrastructure quality, talent availability, and state government policies.

Top States by FDI (FY 2024-25)

Maharashtra and Karnataka jointly attracted 42% of India's total FDI in FY 2024-25. For foreign companies choosing an India base, these two states offer the deepest talent pools, best infrastructure, and most mature business ecosystems. However, states like Gujarat, Tamil Nadu, and Telangana offer competitive incentive packages that can significantly reduce setup and operating costs.

For country-specific guidance on setting up operations in India, refer to our detailed guides: register from USA, register from Singapore, or register from UK.

Emerging FDI Destinations

While the top six states dominate, several emerging destinations are worth watching. Uttar Pradesh has attracted significant FDI through its defence corridor (Lucknow-Aligarh axis) and electronics manufacturing clusters. Odisha is positioning itself as a semiconductor hub with two of the six approved fab projects. Rajasthan and Madhya Pradesh are attracting renewable energy FDI with favorable land policies and solar irradiation profiles. Foreign companies evaluating tier-2 locations can access state-specific incentive packages that sometimes exceed the benefits available in established hubs.

Policy Drivers Behind India's FDI Growth

India's FDI growth is not accidental — it is the result of deliberate policy actions across multiple fronts. Foreign companies should understand these drivers because they directly affect sector-specific investment opportunities and compliance requirements.

Production Linked Incentive (PLI) Schemes

India's PLI programme now covers 14 sectors with a total budgetary outlay exceeding Rs 1,97,000 crore (approximately USD 24 billion). The most impactful schemes for foreign investors include:

• Electronics and IT Hardware: Budget allocation increased to Rs 9,000 crore in FY 2025-26. Apple's contract manufacturers (Foxconn, Pegatron, Tata Electronics) have collectively invested over USD 5 billion
• Semiconductors: India Semiconductor Mission 2.0 with six approved fab projects and four additional manufacturing units approved with Rs 4,600 crore outlay
• Non-Semiconductor Electronics Components: New PLI scheme approved in March 2025 with Rs 22,919 crore outlay targeting PCBs, display modules, and lithium-ion cells
• Automobile and Auto Components: Budget allocation jumped from Rs 347 crore to Rs 2,819 crore, reflecting the EV transition push

Insurance Sector Liberalization

Budget 2025 announced the intention to raise FDI limits in insurance from 74% to 100%, subject to conditions including mandatory domestic investment of premium income. A bill was introduced in Parliament in December 2025. This represents a significant opportunity for global insurance companies.

FDI Policy Simplification

Over 90% of India's sectors now permit 100% FDI under the automatic route, eliminating the need for prior government approval. Recent liberalizations include 100% FDI in coal mining (2019), contract manufacturing (2019), 100% in telecom via automatic route (2021), and space sector liberalization (2024). The few sectors with caps include multi-brand retail (51%), defence (74%, with provisions for 100% in certain cases), and media/broadcasting (various caps).

China Plus One and Supply Chain Diversification

Global companies diversifying supply chains away from China continue to drive India's manufacturing FDI. In a controlled opening, the government has begun easing certain investment restrictions for specific sectors including electronics components, capital goods, and solar equipment — though investments from countries sharing a land border with India (including China) still require government approval under Press Note 3 of 2020.

What the FDI Data Means for Foreign Companies

The quarterly FDI data tells a clear story for companies evaluating India market entry:

High-Growth Opportunity Sectors

• IT and AI Infrastructure: FDI doubling in the sector with massive data centre and cloud investments
• Financial Services: 40.8% growth with insurance sector opening to 100% FDI
• Electronics Manufacturing: PLI-driven growth with Rs 22,919 crore in new incentives for components
• Automobile/EV: 22% growth driven by the EV transition and battery manufacturing
• Renewable Energy: Consistent investment growth with 100% FDI under automatic route

Entry Structure Considerations

The sector you choose directly impacts your entry structure. Most high-growth sectors permit 100% FDI under the automatic route, meaning you can incorporate a private limited company or wholly owned subsidiary without prior government approval, with the FDI filing (FC-GPR) made post-facto to the RBI within 30 days. For sectors with caps or approval requirements, the process adds 4-8 weeks for government clearance through the Foreign Investment Facilitation Portal (FIFP).

For a detailed comparison of entity structures available to foreign investors, see our branch office vs subsidiary comparison and private limited vs LLP comparison.

FDI Compliance: What Happens After Investment

Tracking FDI inflows is valuable for market assessment, but foreign companies must also understand the compliance obligations that follow every dollar of investment. The key post-investment filings include:

• FC-GPR (Foreign Currency-Gross Provisional Return): Filed with the RBI within 30 days of share allotment to non-residents. This is the primary instrument for reporting FDI equity inflows.
• FLA Return (Foreign Liabilities and Assets): Annual return filed with the RBI by July 15 each year. Mandatory for every Indian company that has received FDI or made overseas direct investment.
• Transfer Pricing documentation: Required for companies with international transactions exceeding INR 1 crore. Since virtually every FDI-funded company transacts with its parent, this is effectively universal.
• Annual FEMA compliance: Ongoing compliance with RBI master directions on FDI, pricing guidelines for share issuance, downstream investment reporting, and sectoral cap monitoring.

Non-compliance with these filings can result in penalties under FEMA, compounding proceedings with the RBI, and in severe cases, restrictions on future capital transactions. Our FEMA-RBI compliance service ensures all post-investment filings are handled within statutory deadlines.

FDI Outlook: Sectors to Watch in FY 2026-27

Based on current trajectory, policy signals, and global investment trends, several sectors are positioned for accelerated FDI growth in the coming quarters:

Semiconductor and Electronics Manufacturing

India's semiconductor ambitions are translating into real FDI commitments. With six fab projects in various stages of execution and four additional manufacturing units approved with Rs 4,600 crore outlay, the sector could attract USD 5-10 billion in FDI over the next 2-3 years. The new PLI scheme for non-semiconductor electronics components (Rs 22,919 crore) specifically targets foreign investment in PCBs, display modules, and lithium-ion cell manufacturing — components where India currently imports over 80% of domestic demand.

Green Energy and ESG-Linked Investment

India's target of 500 GW non-fossil fuel energy capacity by 2030 requires an estimated USD 200 billion in investment. Green hydrogen, battery storage, and offshore wind are emerging as new FDI frontiers. The government's green hydrogen policy offering free inter-state transmission for 25 years and land allocation in SEZs has attracted early-stage commitments from European and Japanese energy companies.

Data Centres and Digital Infrastructure

Data centre FDI has grown at 40%+ annually since 2022, driven by data localization requirements, cloud migration, and AI workload growth. India's data centre capacity is expected to double from 1,100 MW in 2024 to 2,200+ MW by 2027. US technology companies — reflected in the tripling of US FDI in Q1 FY26 — are the primary drivers, with investments in hyperscale facilities in Mumbai, Chennai, and Hyderabad.

Defence and Aerospace

The defence sector, with its FDI limit raised to 74% under automatic route (and 100% with government approval for access to modern technology), is attracting increasing foreign interest. India's defence production crossed Rs 1,27,000 crore in FY 2024-25, and the government's push for indigenization under the Aatmanirbhar Bharat programme is creating joint venture opportunities for foreign defence manufacturers.

Insurance and Financial Services

With the insurance FDI limit set to increase from 74% to 100% (legislation introduced in December 2025), global insurance companies are evaluating greenfield entries and additional stake acquisitions in existing joint ventures. The Indian insurance market — valued at approximately USD 130 billion in premiums — remains significantly underpenetrated, with life insurance penetration at 3.2% compared to 7%+ in mature markets.

How to Use This FDI Data for Market Entry Decisions

For foreign companies, quarterly FDI data serves as a strategic compass rather than just an economic indicator. Here is a practical framework for translating these numbers into actionable decisions:

Sector Validation

If FDI in your target sector is growing at 15%+ annually, it signals regulatory friendliness, market opportunity, and existing proof-of-concept by other foreign entrants. Sectors with declining FDI may indicate regulatory tightening, market saturation, or structural challenges that require deeper due diligence before committing capital.

Competitor Activity Mapping

Large FDI inflows in a specific sector indicate that your competitors or potential partners are already building India presence. Cross-referencing FDI data with the RBI's monthly bulletin (which lists individual FDI approvals above certain thresholds) can reveal which companies are entering and at what scale. This intelligence should inform your own entry timing and scale decisions.

Location Strategy

State-wise FDI distribution directly correlates with infrastructure maturity, talent availability, and regulatory efficiency. States attracting high FDI have proven processes for handling foreign company registrations, land allocations, and utility connections. For a first India office, choosing a high-FDI state reduces execution risk, even if incentive packages in emerging states appear more generous on paper.

Structuring and Routing Decisions

Country-of-origin FDI data reveals the most popular investment routing structures. The dominance of Singapore (30%) suggests that the India-Singapore DTAA corridor remains attractive for many investors. Companies should evaluate whether routing their investment through a Singapore or Netherlands holding structure provides meaningful tax benefits compared to direct investment from the home country — a decision that depends on the specific DTAA provisions of their home jurisdiction.

Key Takeaways

• FY 2025-26 is tracking 22% above FY 2024-25 through December 2025, with cumulative FDI equity inflows of USD 47.87 billion — on pace to set a new annual record above USD 90 billion in total FDI
• Services (+40.8%) and IT (+12.3%) dominate sector-wise inflows in FY 2024-25, with IT accelerating sharply in FY 2025-26 driven by AI and cloud infrastructure investments
• The US has tripled its Q1 investment to USD 5.61 billion, while Singapore maintains the largest overall share at 30% of total FDI equity
• Maharashtra (31%) and Karnataka (11%) attract over 40% of all FDI — but Gujarat, Tamil Nadu, and Telangana offer competitive incentive packages for cost-sensitive operations
• PLI schemes are the primary policy driver with enhanced allocations in Budget 2025-26 for electronics, semiconductors, and automobiles — foreign companies in these sectors can access incentives worth 4-6% of incremental sales

If you are evaluating India market entry based on sectoral opportunities, our FDI advisory service provides customized analysis including sector-specific regulatory requirements, optimal entry structure, and incentive eligibility assessment. For understanding the compliance obligations that follow FDI, read our guide on annual compliance for foreign-owned companies in India.