Singapore Overtakes Mauritius as India’s Top FDI Source: Key Investment Trends in Q1 FY 2026-27

The Department for Promotion of Industry and Internal Trade (DPIIT) has released India’s foreign direct investment (FDI) data for the first quarter (April-June) of FY 2026-27. According to the data published on 14 September 2026, India recorded FDI inflows of US$19.82 billion during Q1 FY 2026-27, representing a 6.38 per cent increase from US$18.63 billion recorded during the same quarter of FY 2025-26.

The increase indicates a modest improvement in FDI inflows despite continued uncertainty in the global investment environment. Geopolitical tensions, trade-related measures, and weaker economic conditions in some major markets continue to influence investor sentiment and the timing of cross-border investments.

India FDI figures Q1 FY 2026-27: A snapshot

India’s quarterly FDI performance showed significant month-to-month variation during Q1 FY 2026-27. FDI inflows increased sharply in April before declining in May and recovering in June.

The month-on-month movement suggests that investment activity remained uneven during the quarter rather than following a consistent upward or downward trend. However, the recovery recorded in June contributed significantly to the overall quarterly increase.

Source: FDI Factsheet for 1st quarter of FY 2026-27, DPIIT, GoI

Singapore emerges as India’s leading FDI source

Singapore has emerged as the largest source of FDI equity inflows into India, overtaking Mauritius in cumulative investments. Between April 2000 and June 2026, Singapore’s cumulative FDI inflows into India reached US$199.91 billion, compared with US$189.09 billion from Mauritius.

Singapore accounted for 25 per cent of India’s total FDI equity inflows during the period, while Mauritius contributed 23 per cent. The United States ranked third with a 10 per cent share, followed by the Netherlands and Japan, each with 7 per cent.

The distribution highlights the continued importance of Singapore, Mauritius, the US, and other major investment partners in India’s FDI landscape.

Sector-wise FDI inflows: Services and emerging sectors gain momentum

India’s FDI inflows in Q1 FY 2026-27 show a notable shift across key sectors, with services, trading, non-conventional energy, telecommunications, and chemicals recording higher inflows than in the corresponding quarter of FY 2025-26. These trends indicate continued investor interest in India’s services economy, digital infrastructure, energy transition, and manufacturing-linked activities.

The services sector attracted the highest FDI inflow at US$7.04 billion, more than double the US$3.28 billion recorded in Q1 FY 2025-26. Trading also recorded a substantial increase, rising to US$1.92 billion from US$506 million in the year-ago quarter.

FDI in non-conventional energy increased to US$1.24 billion from US$1.15 billion, while telecommunications saw a significant increase from US$24 million to US$348 million. Inflows into chemicals other than fertilisers also increased to US$719 million from US$140 million.

Maharashtra, Karnataka, and Gujarat remain India’s key FDI destinations

India’s FDI equity inflows continue to be concentrated in a small number of states, with Maharashtra, Karnataka, Gujarat, Delhi, and Tamil Nadu accounting for the largest shares of cumulative inflows between April 2000 and June 2026. Together, these five locations attracted approximately 85 per cent of total FDI equity inflows during the period.

Maharashtra remained the leading recipient, attracting US$111.31 billion, equivalent to 31 per cent of total FDI equity inflows. Karnataka followed with US$72.70 billion and a 20 per cent share, while Gujarat attracted US$51.92 billion, accounting for 14 per cent.

Delhi ranked fourth with US$46.66 billion, representing 13 per cent of cumulative inflows, followed by Tamil Nadu with US$25.30 billion and a 7 per cent share. Haryana and Telangana accounted for 5 per cent and 4 per cent, respectively.

The concentration of FDI across these states highlights the importance of established commercial centres and industrial and technology hubs in India’s investment landscape. For foreign businesses assessing potential locations, these trends provide a useful indication of where international investment has historically been concentrated, although location decisions should also consider sector-specific incentives, infrastructure, talent availability, operating costs, logistics, and applicable state-level regulations.

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What the Q1 FY 2026-27 FDI trends mean for businesses – FAQ

What should companies assess before entering the Indian market?

Foreign businesses should assess India at the sector, state, and regulatory level rather than treating national FDI trends as a proxy for market attractiveness. Market-entry decisions should consider the applicable FDI route, sectoral caps, ownership conditions, licensing requirements, taxation, and state-specific business regulations.

How can investors use FDI trends when selecting a business location?

Historical FDI concentration can serve as an initial benchmark for identifying established investment ecosystems. However, companies should supplement this data with practical considerations such as supply-chain connectivity, availability of skilled labour, infrastructure, proximity to customers and suppliers, utility costs, and state-level incentives before selecting an operating location.

What does the variation in FDI across sectors mean for market-entry strategies?

The divergence in sectoral investment flows suggests that foreign businesses should avoid applying a uniform India market-entry strategy across industries. Companies should evaluate sector-specific demand, competitive intensity, regulatory requirements, investment restrictions, and the availability of local partners before committing capital.

How can foreign investors structure their India expansion plans?

Businesses can evaluate different entry structures based on their commercial objectives and regulatory position. Depending on the activity, options may include establishing an Indian subsidiary, entering through a joint venture, acquiring an existing business, or operating through other permitted structures. The appropriate structure will depend on factors such as ownership requirements, control objectives, capital commitments, tax considerations, and regulatory approvals.

What due diligence should businesses undertake before investing?

Before committing capital, investors should undertake commercial and regulatory due diligence covering the following aspects:

1. FDI eligibility and applicable entry route
2. Sector-specific ownership and investment restrictions
3. Corporate and tax structuring
4. State-level approvals and registrations
5. Land, labour, environmental, and operating requirements
6. Availability of incentives and investment facilitation measures
7. Repatriation, foreign exchange, and reporting obligations
8. Potential compliance requirements following establishment in India

What is the key takeaway for companies evaluating India?

The FDI data provides a useful macro-level indicator of foreign investment activity, but it should form only one part of an investment assessment. Companies can derive greater value from the data by using it to identify potential sectors and locations for further analysis, followed by detailed regulatory, commercial, tax, and operational due diligence before making an investment decision.

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