FDI inflows to India increased by 44% to $39 billion in 2025: UN

New Delhi, India Jul 7, 2026 ALN: The United Nations has reported that foreign direct investment (FDI) inflows to India increased by 44 percent in 2025, reaching USD 39 billion. This growth underscores India's strengthening position as a significant investment destination, reflecting the country's ongoing reforms, strategic policy initiatives, and its appeal to global investors.

The 2026 World Investment Report, released by the United Nations Conference on Trade and Development (UNCTAD), highlights that global FDI also demonstrated resilience, rising by 6 percent to USD 1.6 trillion. This increase indicates a recovery in investment flows following a period of stagnation and decline due to various global pressures. Developed economies experienced an 11 percent increase in inflows, while developing economies saw a modest rise of 2 percent. The disparity in growth rates between developed and developing nations suggests that while the overall global investment climate is improving, challenges remain for emerging markets.

Excluding conduit flows through major European financial centres, global FDI increased by 4 percent following two consecutive years of decline. This statistic highlights the importance of direct investments that contribute to local economies rather than merely serving as financial transactions. However, the report cautions that the outlook for 2026 is clouded by significant downside risks, including trade policy uncertainty, geopolitical tensions, and inflationary pressures that could dampen investor confidence and slow the pace of recovery.

In South Asia, FDI inflows rose sharply from USD 34 billion to USD 46 billion, largely driven by investments in India. This regional growth reflects a broader trend of increasing integration and cooperation among South Asian nations, as well as the growing recognition of India's market potential. Despite the overall increase in FDI, the report notes a decline in announced greenfield investments in India, which fell from over USD 111 billion in 2024 to approximately USD 74 billion in 2025. This decline indicates a more cautious investment cycle, where investors are becoming more selective and strategic about where they allocate their resources.

While total FDI inflows rose, project indicators suggest a more cautious approach to investment. The report states that India has continued to enhance its attractiveness as an investment destination, supported by a proactive policy agenda aimed at diversifying its investment base beyond services and promoting advanced manufacturing. This diversification is critical for India as it seeks to reduce its reliance on traditional sectors and build a more resilient capable of withstanding global shocks.

To attract investments in priority sectors such as electronics and semiconductors, India has launched various initiatives, including the Production-Linked Incentive schemes, Make in India, Start-up India, and the National Industrial Corridor Development Programme. These initiatives are designed to create a supportive environment for both domestic and international investors, fostering innovation and enhancing competitiveness. The Production-Linked Incentive schemes, in particular, aim to incentivize manufacturers to increase production and create jobs, thereby contributing to growth.

These initiatives are complemented by reforms designed to create a more conducive investment environment, such as the National Single Window System and the India Industrial Land Bank. The National Single Window System aims to streamline the approval process for businesses, reducing bureaucratic hurdles and enhancing the ease of doing business in India. The India Industrial Land Bank is intended to provide investors with a comprehensive database of available land for industrial use, facilitating quicker site selection and project implementation.

The reformed FDI regime has reinforced openness to foreign investors, with institutional mechanisms like project development cells and monitoring groups aimed at facilitating approvals and project implementation. These efforts have contributed to a boost in investment momentum, particularly in manufacturing, which is seen as a vital sector for India's transformation. The government's focus on manufacturing aligns with its broader vision of becoming a global manufacturing hub, capable of competing with established players in the industry.

However, the report indicates that the uncertain global environment has interrupted the trend of increasing greenfield investments. Although total FDI inflows rose, the total value of announced greenfield investments in manufacturing dropped significantly from about USD 65 billion in 2024 to USD 27 billion in 2025. This significant drop raises concerns about the sustainability of FDI growth in the face of global uncertainties and shifting investor priorities.

Investment in services, on the other hand, remained stable, with greenfield investments exceeding those in manufacturing. The information and communication technology (ICT) sector emerged as the largest sector in 2025, reflecting ongoing expansion in digital infrastructure and technology-related activities. The growth of the ICT sector is particularly noteworthy as it aligns with global trends toward digitalization and the increasing importance of technology in driving growth.

Financial services also saw renewed activity, with the policy framework in India remaining focused on advanced manufacturing, infrastructure development, and deeper integration into global value chains. The emphasis on financial services indicates a recognition of the sector's critical role in supporting growth and facilitating investments across various industries. Nonetheless, challenges such as tariff uncertainty and weaker global investment sentiment continue to impact the scale of new manufacturing and infrastructure commitments.

In conclusion, while India's FDI inflows have shown significant growth, the decline in greenfield investments and the cautious investment cycle highlight the complexities of the current global landscape. The Indian government will need to continue its efforts to create a stable and attractive investment environment, addressing the underlying concerns that may deter potential investors. As the global evolves, India's ability to adapt to changing conditions and leverage its strengths will be crucial in maintaining its position as a leading destination for foreign direct investment.