India’s FDI Trends in Q1 FY 2025-26

Posted by Written by Archana Rao Reading Time: 3 minutes

India’s foreign direct investment (FDI) inflows rebounded strongly in Q1 FY 2025-26, rising 15 percent year-on-year to US$18.62 billion after a sharp dip in Q4 of FY 2024-25. The surge, led by US investors and concentrated in technology-driven sectors, reflects India’s growing appeal as a resilient economy and reform-oriented investment destination.

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India witnessed a 15 percent rise in FDI during Q1 FY 2025-26 (April–June), with inflows reaching US$18.62 billion, compared to US$16.17 billion in the same period of FY 2024-25. This comes after a sharp 24.5 percent year-on-year decline in Q4 FY25, when inflows had dropped to US$9.34 billion.

Including reinvested earnings and other capital components, the total FDI rose to US$25.2 billion in Q1 FY 2025-26, up from US$22.5 billion in Q1 FY 2024-25.

Top FDI sources for India in 2025

The United States (US) emerged as one of the top investors, contributing US$5.61 billion in Q1 FY26, almost triple its inflows of US$1.50 billion during the same period the previous fiscal and despite ongoing tariff-related challenges. Singapore followed with US$4.59 billion, and Mauritius with US$2.08 billion.

In terms of cumulative investment since April 2000, the US ranks third with US$76.26 billion, after Mauritius (US$182.2 billion) and Singapore (US$179.48 billion).

Share of Top Investing Countries’ FDI Equity Inflow (Value in US$ Million)

Rank

Country

FY 2024-25 (April 2024 – March 2025)

Q1 FY 2025-26 (April-June)

Cumulative equity inflow *(April 2000-June 2025)

Percentage out of total FDI equity inflow

1

Mauritius

8,344

2,081

182,272

24%

2

Singapore

14,942

4,599

179,484

24%

3

US

5,457

5,610

76,261

10%

4

The Netherlands

4,620

667

53,970

7%

5

Japan

2,478

551

44,947

6%

6

UK

795

243

36,130

5%

7

UAE

4,345

1,007

23,855

3%

8

Cayman Islands

371

676

16,313

2%

9

Cyprus

1,203

1,108

15,761

2%

10

Germany

469

191

15,303

2%

Source: FDI fact sheet, DPIIT

In terms of sectoral performance, major sectors attracting FDI during Q1 FY 2025-26 included computer software and hardware (US$5.4 billion), services (US$3.28 billion), and automobiles (US$1.29 billion).

Sectors Attracting Highest FDI Equity Inflow (Value in US$ Million)

Rank

Sector

FY 2024-25 (April 2024 -March 2025)

Q1 FY 2025-26 (April-June)

Cumulative equity inflow *(April 2000-June 2025)

Percentage out of total FDI equity inflow

1

Services sector**

9,347

3,281

122,124

16%

2

Computer software and hardware

7,814

5,460

116,158

16%

3

Trading

4,176

506

48,077

6%

4

Telecommunications

746

24

40,096

5%

5

Automobile industry

1,586

1,293

39,148

5%

6

Construction (infrastructure) activities

2,245

688

36,850

5%

7

Construction development: Townships, housing, built-up infrastructure

529

75

27,214

4%

8

Drugs and pharmaceuticals

891

1,197

24,617

3%

9

Chemicals (other than fertilizers)

1,060

140

23,347

3%

10

Non-conventional energy

4,012

1,148

23,048

3%

** Services sector includes financial, banking, insurance, non-financial/business, outsourcing, research and development (R&D), courier, technology testing and analysis, and other.

For state-wise FDI inflow into the country, Karnataka led the inflows in Q1 FY26 with US$5.69 billion, followed closely by Maharashtra (US$5.36 billion) and Tamil Nadu (US$2.67 billion). Other key recipients were Gujarat (US$1.2 billion), Haryana (US$1.03 billion), Delhi (US$1 billion), and Telangana (US$395 million).

States Attracting Highest FDI Equity Inflow (Value in US$ Million)

Rank

States / Union Territory

FY 2024-25 (April 2024 -March 2025)

FY 2025-26 (April-June)

Cumulative equity inflow *(April 2000-June 2025)

Percentage out of total FDI equity inflow

1

Maharashtra

19,589

5,364

94,040

31%

2

Karnataka

6,619

5,696

63,346

21%

3

Gujarat

5,711

1,200

46,112

15%

4

Delhi

6,091

1,099

38,907

13%

5

Tamil Nadu

3,681

2,678

17,298

6%

6

Haryana

3,147

1,030

13,907

5%

7

Telangana

2,994

395

11,163

4%

8

Rajasthan

374

549

3,267

1%

9

Jharkhand

7

3

2,677

1%

10

Uttar Pradesh

436

80

2,151

1%

India’s FDI policy landscape

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India continues to pursue an investor-friendly FDI policy, with most sectors allowing 100 percent foreign investment under the automatic route. Over the years, India has progressively liberalized FDI norms:

  • 2014–2019: Raised investment caps in defense, insurance, and pensions; eased rules in construction, aviation, and single-brand retail.
  • 2019–2024: Permitted 100 percent FDI in coal mining, contract manufacturing, and insurance intermediaries.
  • 2025 Union Budget: Proposed raising the FDI cap from 74 percent to 100 percent for insurance companies that reinvest their entire premium domestically.

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