India has achieved a significant milestone as its foreign direct investment (FDI) inflows surpassed the remarkable figure of $1 trillion, as reported by the Department for Promotion of Industry and Internal Trade (DPIIT). This achievement spans from April 2000 to September 2024 and places India among the world's notable destinations for overseas investments.
With this new figure, total FDI reached approximately $1.03 trillion, marking India's emergence as a safe and appealing choice for foreign investors. This growth reflects the country's strategic initiatives and policies aimed at enhancing investment prospects.
Among the countries contributing to this influx, Mauritius led the pack, accounting for about 25% of India’s FDI. Singapore followed closely with 24%, and the United States came in third at 10%. Other notable investors included the Netherlands with 7%, Japan with 6%, the UK with 5%, and the UAE at 3%. Smaller contributions also came from the Cayman Islands, Germany, and Cyprus, each providing around 2% of the total inflow.
Specifically, during this period, Mauritius contributed roughly $177.18 billion, Singapore contributed approximately $167.47 billion, and the U.S. injected around $67.8 billion. These figures highlight the diverse sources of investment and underline the global confidence in India’s market.
Investment sectors also tell a compelling story, with the services sector leading the way. The sectors attracting the most FDI included software, telecommunications, and trading, showcasing India’s strength in technology and communications. Interestingly, between 2014 and 2024 alone, India attracted cumulative FDI inflows totaling $667.4 billion. This figure demonstrates impressive growth of 119% compared to the previous decade (2004-2014), which saw around $304.4 billion flowing to India.
Among these sectors, the manufacturing industry saw noteworthy growth, with FDI equity inflows skyrocketing by 69% during the last decade compared to the previous one. From $97.7 billion during 2004-2014, the manufacturing sector attracted $165.1 billion from 2014-2024. This surge highlights the government's efforts to keep FDI policies updated and relevant as part of its broader Make in India initiative.
The Indian government’s pro-investment stance is illustrated by periodic reviews and adjustments to its FDI policies, which now permit overseas investments through automatic routes across most sectors. Only certain industries, like telecommunications and pharmaceuticals, still require government approval. Notably, sectors like gambling, lottery operations, and the manufacturing of certain tobacco products remain entirely off-limits to foreign investors.
Looking toward the future, experts remain optimistic about the continued growth of FDI inflows. They cite positive macroeconomic indicators, improved industrial output, and appealing Production Linked Incentive (PLI) schemes as key drivers propelling future investments. Avimukt Dar, Founding Partner at INDUSLAW, expressed confidence, noting, "The inflows are likely to continue in a strong form." He pointed to the potential revival of private equity financing within the tech sector, indicating budding trust and interest from international financial sources.
Crucially, FDI is not just beneficial; it is pivotal for India's economic future. It contributes significantly to maintaining the balance of payments and underpins the value of the Indian Rupee. The assurance of stable and regulated foreign investment proves especially important for sectors under development, such as infrastructure, which need comprehensive funding for growth.
Overall, the surpassing of the $1 trillion mark serves as both a celebration of India’s progress and as encouragement for sustained growth. The dynamic nature of investment from various nations and sectors reinforces the belief among global investors about India’s potential. The coming years will undoubtedly provide insights not only on how these investments are utilized but also on how they shape India's economic outlook moving forward.