FDI inflows hit 3-yr high, grow 14% to $81 b in FY25

Foreign direct investment (FDI) equity inflow into India fell 24.5% on-year to $9.34 billion in January-March FY25, data released by the Department for Promotion of Industry and Internal Trade (DPIIT) showed.

FDI inflows in the year-ago period were $12.37 billion. Overall, the FDI equity inflows in FY25 were $50 billion, up 13% on-year from $44.4 billion in 2023-24.

Total FDI, which includes equity inflows, reinvested earnings and other capital, grew 14% to $81.04 billion in FY25, the highest in the last three years and 14% higher than $71.3 billion in FY24.

"The government has put in place an investor-friendly FDI policy, under which most sectors are open for 100% FDI through the automatic route. This policy is reviewed on an ongoing basis to ensure that India remains an attractive and competitive investment destination," the commerce and industry ministry said in a statement.

The services sector emerged as the top recipient of FDI equity in FY25, attracting 19% of total inflows, followed by computer software and hardware at 16% and trading at 8%. FDI into the services sector rose 40.77% to $9.35 billion from $6.64 billion in the previous year. "India is also becoming a hub for manufacturing FDI, which grew 18% in FY25, reaching $19.04 billion compared to $16.12 billion in 2023-24," the ministry said.

Maharashtra accounted for the highest share (39%) of total FDI equity inflows in 2024-25, followed by Karnataka (13%) and Delhi (12%). Among source countries, Singapore led with 30% share, followed by Mauritius (17%) and the US (11%).

As per the statement, in the regulatory domain, the government has undertaken transformative reforms across multiple sectors to liberalise FDI norms.

"Between 2014 and 2019, significant reforms included increased FDI caps in defence, insurance and pension sectors, and liberalised policies for construction, civil aviation and single-brand retail trading," it said.

Allowing 100% FDI under the automatic route in coal mining, contract manufacturing and insurance intermediaries were the other measures. "These trends reaffirm India's position as a preferred global investment hub, enabled by a proactive policy framework, an evolving business ecosystem and rising international confidence in India's economic resilience," it said.