India Foreign Direct Investment Tracker 2025

India recorded foreign direct investment (FDI) inflows exceeding US$50 billion in FY 2024–25, reflecting a 13 percent rise from the US$44.4 billion received in the previous fiscal year.

To further strengthen its FDI profile, India is actively scaling up manufacturing capabilities across diverse sectors and streamlining foreign investment regulations. These initiatives are designed to boost India’s competitiveness in the global market.

We bring you the latest updates on the country’s evolving FDI landscape.

Since 2000, India’s FDI portfolio has grown exponentially, with investments from over 160 countries flowing into key sectors, such as merchandise manufacturing and IT services.

FDI refers to capital inflows into India through equity instruments by individuals or entities based outside the country. These investments may be:

• In an unlisted Indian company; or
• In a listed Indian company, where the foreign investor holds 10 percent or more of the post-issue paid-up capital on a fully diluted basis.

Fully diluted basis refers to the total number of shares that would be outstanding if all potential sources of conversion—such as stock options or convertible securities—are exercised. If an existing foreign investment in a listed Indian company falls below the 10 percent threshold (on a fully diluted basis), it will still be considered FDI under current regulations.

Decoding entry routes for FDI

Permissible FDI in India can be made in two ways.

1. Automatic route: An automatic route means investment by a person residing outside India does not require the prior approval of the Reserve Bank of India (RBI) or the central government.
2. Government route: Government route means investment by a person residing outside India requires prior government approval, and foreign investment received must meet conditions stipulated by the central government.

Capital received in India through the acquisition of existing shares and money received by the RBI through various non-resident Indians (NRI) schemes are also counted as FDI.

Source: DPIIT, FDI newsletter, Volume 33, January 2025.

Key FDI provisions in major sectors in India

India permits 100 percent FDI under the automatic route in several key sectors. For instance, in the agriculture and plantation segment, FDI is fully allowed in specified activities such as horticulture, floriculture, and animal husbandry, as well as plantations like tea, coffee, and rubber.

The manufacturing sector welcomes full FDI under the automatic route, including in defense manufacturing, though investment beyond 74 percent in the defense industry needs government approval if it involves access to modern technology.

Source: India FDI Policy

Other high-potential sectors, such as construction, industrial parks, telecom, e-commerce, trading, and railway infrastructure, also allow 100 percent FDI under the automatic route. In financial services, limits vary: 100 percent FDI is allowed in non-banking financial companies (NBFCs), asset reconstruction companies (ARCs), and insurance intermediaries, while insurance and private banking sectors have caps of 74 percent, with higher thresholds requiring government approval.

Overall, India maintains a liberalized FDI regime with automatic approvals in most sectors, with strategic limits and approval requirements only in sensitive areas.

India’s FDI landscape in FY 2024-25

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India’s FDI trends in FY 2024–25 reflect a cautious but steady inflow of global capital amid ongoing global economic volatility and evolving domestic reforms. According to a fact sheet published by the Department for Promotion of Industry and Internal Trade (DPIIT), India received an FDI equity inflow of approximately US$54.3 billion during the fiscal year, indicating a moderate pace of investment activity compared to peak inflows witnessed in prior years.

Total FDI inflows and outflows in 2025

In India, the FDI inflows were highest in August 2024, at US$6.39 billion, followed by May 2024 (US$5.85 billion) and June 2024 (US$5.42 billion). These peak periods can be attributed to renewed investor interest in India’s infrastructure, digital services, and manufacturing sectors.

However, the overall trend remained inconsistent, with noteable dips in November 2024 (US$2.29 billion) and February 2025 (US$2.83 billion). This suggests a degree of cautious investor sentiments amid global interest rate fluctuations and ongoing geopolitical tensions.

Source: Fact Sheet, DPIIT

Key sectors attracting foreign investment in India

In FY 2024–25, India’s foreign direct investment (FDI) inflows were led by a handful of key sectors, reflecting global investor confidence in the country’s evolving economic landscape. The services sector emerged as the top recipient, attracting US$9.35 billion—a notable recovery from the previous year. This sector, which includes financial services, business consulting, and other professional services, accounted for 16 percent of cumulative FDI inflows since April 2000, underscoring its central role in India’s economic engine.

Close behind, the computer software and hardware sector brought in US$7.81 billion, contributing a significant 15 percent to India’s total cumulative FDI.

Top regions in India receiving FDI

In FY 2024-25, Maharashtra and Karnataka emerged as the top recipients of FDI in India, jointly attracting 51 percent of the country’s total inflows, per the DPIIT.

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Maharashtra secured the highest share, drawing in US$19.58 billion—about 31 percent of India’s total FDI for the fiscal year. Karnataka followed with US$6.61 billion in overseas investments. Other major beneficiaries included Delhi with US$6 billion, Gujarat with US$5.71 billion, Tamil Nadu with US$3.68 billion, Haryana with US$3.14 billion, and Telangana with US$2.99 billion.

Experts attribute this concentration of FDI in Maharashtra and Karnataka to significant improvements in infrastructure, which have made these states more attractive to foreign investors.

Overall, India witnessed a 14 percent year-on-year growth in total FDI—comprising equity inflows, reinvested earnings, and other capital—reaching US$81.04 billion in FY 2025-24, marking the highest level recorded in the past three years. In comparison, FDI in FY 2023-24 stood at US$71.3 billion.

ALSO READ: India Economy 2024: GDP, FDI, Trade Trends

Prohibited sectors and activities for FDI

As per the consolidated FDI policy circular dated October 15, 2020, FDI is prohibited in the following sectors:

• Lottery business including government/private lottery, online lotteries, etc.;
• Gambling and betting, including casinos etc.;
• Chit funds;
• Nidhi companies;
• Trading in transferable development rights (TDRs);
• Real estate business or construction of farm houses: ‘real estate businesses’ shall not include development of townships, construction of residential /commercial premises, roads or bridges and real estate investment trusts (REITs) registered and regulated under the SEBI (REITs) Regulations 2014;
• Manufacturing of cigars, cheroots, cigarillos and cigarettes, of tobacco or of tobacco substitutes; and
• Activities/sectors not open to private sector investment, including:
  1. Atomic energy; and
  2. Railway operations (other than permitted activities mentioned in permitted sectors).

FDI reporting requirements for Indian companies

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After receiving foreign investment, Indian companies must follow certain reporting procedures as required by the RBI. To streamline and manage different types of foreign investment reports, the RBI launched the Foreign Investment Reporting and Management System (FIRMS) portal.

Steps to report FDI on the FIRMS portal

1. Update the entity master form: This form captures key details of the company and its foreign investment structure. It must be filled out by an authorized person (Entity User) from the company.
2. Business user registration: The Business User is the designated person who submits FDI transaction details on behalf of the company using the FIRMS portal.
3. File the Single Master Form (SMF): The SMF combines multiple reporting requirements into one unified form. It covers different types of filings.

This reporting process ensures transparency and compliance with India’s foreign exchange laws. Timely filing is crucial to avoid penalties and maintain regulatory compliance under the Foreign Exchange Management Act (FEMA), 1999.

Frequently Asked Questions (FAQs) on FDI in India

Q 1. What is Foreign Direct Investment (FDI)?

FDI refers to investments made by a foreign entity (individual, company, or government) in the capital of an Indian company, either through establishing a new venture or acquiring a stake in an existing one.

Q 2. Who regulates FDI in India?

The Department for Promotion of Industry and Internal Trade (DPIIT) under the Ministry of Commerce and Industry formulates FDI policy. The Reserve Bank of India (RBI) monitors and governs FDI under the FEMA regulations.

Q 3. Is 100 percent FDI allowed in all sectors?

No, 100 percent FDI is allowed only in select sectors such as e-commerce (marketplace model), single-brand retail, and manufacturing under the automatic route. Other sectors have specific caps and conditions.

Q 4. How can a foreign investor invest in India?

Foreign investments in India can be made through the following:

• Equity shares
• Convertible debentures or preference shares
• Reinvestment of profits
• Mergers & acquisitions

  The process involves compliance with Indian corporate and foreign exchange laws.

Q 5. What are the recent trends in FDI inflows into India?

India has seen steady FDI growth in recent years, with FY2024-25 recording inflows of over US$81 billion, driven by strong interest in sectors like IT, manufacturing, and infrastructure.

Q 6. What are the benefits of FDI for India?

FDI brings:

1. Capital investment
2. Employment generation
3. Access to advanced technology
4. Global business practices
5. Export promotion

Q 7.What are the key compliance requirements for FDI in India?

Foreign investors must comply with the below mentioned requirements:

1. FDI policy limits
2. RBI reporting requirements (e.g., filing FC-GPR/FC-TRS forms)
3. Sectoral regulations
4. Company law provisions

Q 8. Can FDI be repatriated?

Yes, subject to certain conditions. Profits and capital can be repatriated after taxes and regulatory clearances, per RBI and FEMA guidelines.

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