India FDI Inflow in FY 2023: Latest Data Analysis on Investment Landscape

Posted by Written by Naina Bhardwaj Reading Time: 6 minutes

India remains a bright spot in the world economy although a decrease has been recorded in the government’s latest figures for foreign direct investment (FDI). The decline in FDI can be attributed to global headwinds such as the Russia-Ukraine conflict, global recessionary pressures, spillover of the COVID-19 pandemic, and other economic uncertainties.

Yet, the Indian market is key for global firms as they strategize the diversification of their supply chains beyond China. India has several growth factors that continue to create prospects for greenfield and brownfield investment – a large labor market, enabling policy environment, and expanding digital economy. In terms of consumption growth, this has been boosted by steadily growing disposable incomes and the economic rise of non-metropolitan tier-2 and tier-3 cities. This article delves into the latest data on the top states and sectors receiving FDI in FY 2023.

Over the last decade, India has experienced an average GDP growth rate of 5.5 percent, reflective of its aggressive economic expansion. With a thriving population of 1.4 billion, India is well-positioned to seize commercial leadership in the current decade, buoyed by impressive economic growth and a flourishing stock market that could propel it to become the world’s third-largest economy by 2030. These factors have created unparalleled opportunities for growth in a country that recently overtook China as the world’s most populous nation.

With this growth, India is emerging as a major player in the global economy, presenting a unique opportunity for investors and businesses alike. The country’s unique attributes, such as its enabling policy landscape, vast consumer markets, and distinctive digital infrastructure, are making it an attractive destination for investment. 

By 2031, India is projected to drive one-fifth of global growth, propelled by the convergence of trends such as global offshoring capabilities, digital innovation, and energy transition.

Advantage India

India’s advantageous demography and steady growth trajectory make it an appealing destination for foreign investment. In the last two decades (April 2000 – March 2023), India has attracted over US$919.63 billion in total FDI.

Despite the Indian government’s restrictions on FDI from countries that share land borders with India, such as China, the country received a record FDI inflow of approximately US$84.8 billion in the fiscal year (FY) 2022, including US$7.1 billion in FDI equity inflows in the services sector.

However, FY 2023 saw a drop in FDI inflows in India due to various factors, including the ongoing conflict between Russia and Ukraine, changes in US monetary policy, and other global uncertainties.

However, according to the 2023 Economic Survey, a rebound in incoming FDI is expected. This can be attributed to the sectoral production-linked incentive (PLI) schemes, growth prospects in tier-2 and tier-3 cities, and new investment facilitation measures like the National Single-Window System (NSWS), which streamlines the approval and clearance process for investors, entrepreneurs, and businesses. Other factors pushing India’s growth trajectory forward include high-tech industrial development, market size, and advancements in the digital and technology ecosystem.

Factors Attracting FDI in India

How much FDI did India receive in FY 2023?

In terms of foreign equity inflows, as per government data, India received US$52.34 billion in 2022, marking an increase from the US$51.34 billion recorded in 2021 but falling short of the US$64.68 billion recorded in 2020. In FY 2023, India received equity inflows worth US$46.03 billion.

The total FDI inflows received in FY 2023, which includes equity inflows, reinvested earnings, and other capital sources, amounted to US$70.97 billion – a decrease from the US$84.83 billion recorded during FY 2022. 

Top FDI recipient sectors in India in FY 2023

In the FY 2023, foreign investors showed keen interest in multiple sectors in India, with the highest FDI inflows seen in computer software and hardware, attracting investments worth US$9.39 billion. The services sector also received significant foreign investment, totaling US$8.70 billion, covering financial, banking, insurance, and business services.

Additionally, the trading sector received investments worth US$4.79 billion, followed by drugs and pharmaceuticals (US$2.05 billion), the automobile industry (US$1.90 billion), chemicals (US$1.85 billion), and construction (infrastructure) activities (US$1.70 billion).

Sector-wise FDI Distribution in India

Top investor countries in India in FY 2023

In FY 2023, Singapore accounted for maximum inward FDI in India at US$17.20 billion, followed by Mauritius (US$6.13 billion), the US (US$6.04 billion), UAE (US$3.35 billion), and the Netherlands (US$2.49 billion).

Other top countries in terms of FDI equity inflow in India during the first three quarters of FY 2023 include UK, Japan, Cyprus, Cayman Islands, and Germany.

From April 2000 to March 2023, Mauritius was the top source of FDI equity inflow into India, accounting for 26 percent of investments worth US$163.87 billion. Singapore emerged as the second largest investor, contributing 23 percent of the investments in India during this period – valued at US$148.16 billion.

The US accounted for nine percent of the FDI equity inflow, followed by the Netherlands (seven percent), Japan (six percent), and the UK (five percent). The UAE, Germany, Cyprus, and the Cayman Islands each accounted for the remaining two percent.

Top Investing Countries’ FDI Equity Inflow into India (US$ Million)


FY 2021

FY 2022

FY 2023

Cumulative equity inflow
(April, 2000-March, 2023)

Percentage share











































Cayman Island


















Leading Indian states attracting FDI in FY 2023

According to data from the DPIIT, Maharashtra and Karnataka and were the frontrunners in attracting FDI inflows in FY 2023. Maharashtra emerged as the top recipient of FDI with a total of US$14.80 billion, followed by Karnataka (US$10.42 billion), Delhi (US$7.53 billion), and Gujarat (US$4.71 billion).

An analysis of the period from October 2019 to March 2023 indicates that Maharashtra was the most preferred state for FDI, accounting for 29 percent (US$53.97 billion) of the total investments received in the country. Karnataka, Gujarat, and Delhi followed with 24 percent (US$44.46 billion), 17 percent (US$31.90 billion), and 13 percent (US$25.19 billion), respectively.

Tamil Nadu, Haryana, Telangana, Rajasthan, and West Bengal were other states that also performed well in attracting FDI.

Notably, Uttar Pradesh (UP) has emerged as an attractive FDI destination, with investment proposals worth US$400 billion received during the recently concluded UP Global Investor’s Summit 2023.

India’s liberal investment climate

Most sectors in India allow FDI through the automatic route. However, in areas such as telecom, media, pharmaceuticals, and insurance, foreign investors must obtain government approval. For investments made under the government approval route, foreign investors must obtain prior clearance from the respective ministry or department. In contrast, investments made under the automatic route only require the investor to inform the Reserve Bank of India (RBI) after the investment is made.

India's Investment Landscape

There are currently nine sectors in which FDI is prohibited in India, including lottery, gambling and betting, chit funds, Nidhi company, real estate business, and manufacturing of cigars, cheroots, cigarillos and cigarettes using tobacco.

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(This article was originally published on April 20, 2023 and last updated on June 7, 2023.)

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