Amid FDI slump, focus turns on chemical, leather and electronics

The government has identified chemicals, ESDM (electronics system design & manufacturing), leather and footwear as sectors in which it wants to attract more foreign direct investment (FDI). It's also working with states on a larger plan to encourage investment from overseas.

The efforts come as FDI equity inflows dropped 24.5% to $9.34 billion in the March quarter from the year before. Net FDI inflows were $35 million in May, 98% lower from the year before and 99% lower than the $3.9 billion in April 2025.

"Invest India has identified some sectors and the department is also focusing on some," said an official. "There is a push to diversify supply chains and talks are happening even at the state level."


The key sectors attracting the maximum inflows include services, computer software and hardware, telecommunications, trading, construction development, automobile, chemicals and pharmaceuticals.

Certain toy companies, as per the official, are keen to shift a part of their supply chains to India.

The Department for Promotion of Industry and Internal Trade (DPIIT) is discussing ways of attracting FDI with Andhra Pradesh and Karnataka, the official said.

"UP, Odisha, MP and Maharashtra are picking up in FDI," the person added.

The exercise is significant as India seeks to achieve an annual FDI of $100 billion from $70-80 billion now.

Jan Vishwas

Continuing with its efforts toward ease of doing business, the official said a cabinet note on the Jan Vishwas 2.0 legislation to decriminalise and deregulate certain laws, is in the final stages. The bill is scheduled to be introduced in the ongoing monsoon session of parliament.

The Jan Vishwas (Amendment of Provisions) Bill 2025 seeks to promote ease of doing business and improve regulatory compliance and more than 100 provisions in various laws could be decriminalised to further reduce legal complexities and the compliance burden.

"We have completed inter-ministerial consultations and the cabinet note is in its final stages," the official said.

Under the Jan Vishwas (Amendment Of Provisions) Act 2023, around 183 provisions in 42 Acts related to 19 departments were decriminalised.

Overall, more than 40,000 compliances across the country have been eliminated or simplified and there is a significant push to reduce the burden of criminalisation of many laws.