India FDI Report FY 2025-26: Sustained Capital Inflows Amid Global Reallocations

India recorded an 18 percent increase in FDI inflows in FY 2025–26, with investments reaching US$58.85 billion. The figures reflect sustained foreign investor confidence in India’s digital economy, manufacturing capabilities, and long-term growth potential.

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The central government has released India’s foreign direct investment (FDI) statistics for FY 2025-26 on June 3, 2026, highlighting continued investor confidence in the Indian economy. The latest figures indicate strong growth in foreign investment inflows, supported by ongoing economic reforms, expanding domestic consumption, and India’s position as a preferred destination for global capital.

As per the data provided by the Department for Promotion of Industry and Internal Trade (DPIIT), India received total FDI inflows of US$58.85 billion during FY 2025-26 (April 1, 2025, to March 31, 2026). This represents an 18 percent increase compared to the previous financial year. The figure includes equity inflows, reinvested earnings, and other capital contributions.

With this performance, cumulative FDI inflows into India since April 2000 have reached an estimated US$1.16 trillion, indicating the country’s long-term attractiveness as an investment destination for multinational corporations and institutional investors.

Major source countries driving FDI equity inflows

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Singapore retained its position as India’s largest source of FDI equity capital, contributing US$19.8 billion during FY 2025–26. The United States emerged as the second-largest contributor, with equity inflows more than doubling year-on-year to US$11.17 billion, reflecting strengthening investment ties between the two economies.

Mauritius remained a significant investment source despite a decline in inflows compared to the previous year, while Japan recorded a notable increase in investments. 

Source: FDI quarterly factsheet, DPIIT

Long-term investment leaders

On a cumulative basis, Singapore and Mauritius continue to dominate India’s FDI landscape. Since April 2000, Singapore has contributed nearly US$194.7 billion in equity inflows, closely followed by Mauritius at US$186.8 billion. The US ranks third with cumulative equity investments of US$81.8 billion, highlighting the sustained role of these jurisdictions in facilitating foreign investment into India.

Top FDI destinations in FY 2025-26

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Maharashtra remained India’s leading destination for foreign direct investment in FY 2025–26, attracting US$18.4 billion in FDI equity inflows. Karnataka emerged as the strongest performer among major states, with inflows nearly doubling to US$12.9 billion, reflecting sustained investor interest in the state’s technology ecosystem, startup landscape, and Global Capability Centers (GCCs).

States such as Rajasthan and Uttar Pradesh registered significant year-on-year growth, indicating that foreign investors are increasingly exploring emerging manufacturing and infrastructure hubs beyond India’s traditional investment destinations.

India’s top sectors receiving FDI inflows in FY 2025-26

Computer software and hardware emerged as the largest recipient of FDI equity inflows in FY 2025–26, attracting US$13.9 billion, a sharp increase from US$7.8 billion in the previous year. The services sector remained a key investment destination with US$10 billion in inflows, reinforcing India’s position as a global hub for technology services, business process management, financial services, and digital operations.

The rise in investments across manufacturing-oriented sectors such as automobiles and pharmaceuticals reflects growing confidence in India’s industrial capabilities and supply chain ecosystem.

Emerging investment themes beyond the top FDI sectors in FY 2025–26

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While technology, services, and manufacturing remain the largest recipients of foreign investment, cumulative FDI trends highlight several emerging sectors that are steadily gaining traction among global investors:

1. Electronics and semiconductor manufacturing: Electronics manufacturing has attracted cumulative FDI equity inflows of approximately US$4.9 billion since 2000. India is prioritizing semiconductor fabrication, electronic components, and advanced manufacturing through targeted incentives. The sector is expected to become a major beneficiary of global supply chain diversification and “China+1” strategies.

2. Healthcare and medical services: Investor interest is expanding beyond pharmaceuticals into hospitals, diagnostics, specialized healthcare services, and healthcare technology, driven by rising healthcare demand and continued investment in medical infrastructure.

3. Food processing and agribusiness: India’s food processing sector has attracted cumulative FDI inflows of approximately US$13.5 billion. The domestic consumer market, strong agricultural base, and growing focus on value-added food exports are creating opportunities for foreign investment across food processing and supply chain infrastructure.

4. Consultancy and professional services: Consultancy services have received cumulative FDI inflows of around US$6.5 billion, supported by the rapid expansion of GCCs, business services operations, and knowledge-intensive industries.

5. Media, digital content, and information services: Rising digital consumption and the growth of India’s online economy are creating new opportunities in information and broadcasting-related sectors, including digital media and content services.

Latest policy reforms supporting higher FDI inflows

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India has updated its foreign investment framework to improve ease of doing business while maintaining regulatory safeguards. A notable development in 2026 was the targeted relaxation of restrictions under Press Note 3 (PN3), which governs investments from countries sharing a land border with India. Under the revised rules, minority investments with beneficial ownership below 10 percent can enter through the automatic route, provided they do not confer control and comply with applicable sectoral conditions.

The central government has introduced a 60-day fast-track approval mechanism for proposals in strategic manufacturing sectors, including electronics components, capital goods, semiconductors, and solar manufacturing inputs. By combining streamlined approval processes with targeted sectoral incentives, policymakers aim to support manufacturing expansion, technology transfer, and deeper integration into global value chains.

What do the India FDI figures for FY 2025–26 signal about its investment appeal?

1. India remains resilient amid global uncertainty. The 18 percent increase in FDI inflows demonstrates sustained investor confidence despite geopolitical tensions, supply chain disruptions, elevated interest rates, and renewed trade uncertainty arising from protectionist measures, including tariff policies introduced by the present US administration under President Donald J. Trump.
2. Global companies continue to deepen their India presence. Strong growth in foreign investment indicates that multinational corporations increasingly view India as both a major consumer market and a strategic production base within global value chains.
3. India is benefiting from supply chain diversification trends. Rising investments in technology, automobiles, pharmaceuticals, and infrastructure suggest that investors are aligning with broader “China+1” and supply chain resilience strategies aimed at reducing geographic concentration risks.
4. US investors are making larger long-term commitments. FDI inflows from the US more than doubled during FY 2025-26, indicating growing confidence in India’s economic outlook, manufacturing ecosystem, and expanding role in global business operations.
5. Technology remains the primary investment magnet. Record inflows into computer software and hardware, coupled with strong investment growth in Karnataka and Maharashtra, reinforce India’s position as a leading destination for digital services, innovation, artificial intelligence, and GCCs.
6. Manufacturing investment momentum is strengthening. Higher inflows into automobiles, pharmaceuticals, and infrastructure-related sectors point to increasing confidence in India’s industrial capabilities, export potential, and long-term growth prospects.
7. Policy reforms are reinforcing investor confidence. Recent measures, including targeted relaxation of Press Note 3 restrictions and the introduction of a 60-day fast-track approval mechanism for strategic manufacturing projects, signal the government’s commitment to facilitating investment while maintaining regulatory safeguards.
8. India is emerging as a key beneficiary of global capital reallocation. Investors increasingly view India as a critical destination for manufacturing expansion, technology development, and supply chain diversification in an increasingly fragmented global economy.

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Key takeaway

The latest FDI figures indicate that India is increasingly being viewed as both a large consumer market and a strategic investment destination within global supply chains. Despite geopolitical uncertainty and evolving trade policies, including potential tariff-related disruptions, foreign investors appear to be making longer-term bets on India’s technology ecosystem, manufacturing capabilities, skilled workforce, and policy-driven growth agenda. The strong growth in FDI inflows suggests that, at least for now, concerns about global trade fragmentation have been outweighed by confidence in India’s medium- to long-term economic prospects.

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