India needs reforms push to draw investments, says Economic Survey

India needs to establish a "single, empowered centre of accountability" and a task force to engage top multinationals to boost foreign direct investments and position itself as a credible alternative production hub, the Economic Survey has said.

It called for a multi-pronged strategy to strengthen the country's investment climate by addressing both structural and cyclical factors, and promote the advantages of stability, macroeconomic strength, sustained growth and market size.

This is crucial as despite a clear government intent and proven economic management, FDI inflows remain below their potential, the survey said.


Companies harvest profits from established operations in India while hesitating to commit fresh capital amid global uncertainty, it noted.

"It is important to examine the return on inward FDI, while there is a recent slowdown in net FDI, which would indicate the profitability of the investments," the survey said.

Gross FDI inflows into India were $81 billion in FY25, up 13% year-on-year. The proposed empowered centre should integrate with global suppliers, meet regulatory and compliance standards, and provide predictability over a multi-year time frame, the survey said.

While Invest India is there, the integration of efforts, culminating in a structure led by the highest levels of the government with robust Centre-state coordination, is what would make large investors believe in our intention to host them, it said. A common thread running across senior empowered structures is their authority to negotiate investment deals using incentives, experts said. "India is looked at as an attractive investment destination, but the total FDI pie is under stress and it is difficult to get a larger share of the pie," said Ranen Banerjee, partner at PwC India.

"No one wants to take long-term bets as supply chains are getting reoriented. There is postponement of decision-making, and risk aversion. Also, a lot of capital is flowing in emerging technologies, which is not coming to India and could be starving other investments," he said. The survey has suggested proactive reforms such as a targeted strategy that identifies a specific set of GVC (global value chain) anchors and establishes a state apparatus that collaborates directly with them as partners to resolve cross-agency issues and provide time-bound solutions.

"The window for action is still open, but it will not remain so indefinitely," it said.

The survey also noted the challenge involved in sustaining FDI inflows in an environment of heightened global volatility and intense competition from emerging FDI destinations like Vietnam and Malaysia. Proactive diplomacy can help offset tariff challenges while improvements in logistics and workforce development are key as foreign investors prioritise policy predictability and sustainability.