India is poised for a strong rebound in foreign direct investment (FDI) in 2026, backed by solid macroeconomic fundamentals, major investment commitments
from global corporations, and sustained government efforts to improve ease of doing business. Despite a challenging global environment marked by slowing growth and geopolitical uncertainty, India continues to stand out as a preferred investment destination among major emerging economies. FDI Rebounds Sharply in FY26 So Far India recorded a strong recovery in FDI inflows during the second quarter of the current financial year. Total inflows rose over 18% year-on-year to $35.18 billion during April–September 2025, according to official data. For the full year 2024–25, total FDI crossed $80.5 billion, an encouraging performance amid global uncertainty. Gross overseas investments during January–October 2025 alone exceeded $60 billion, underscoring continued foreign investor confidence in the Indian economy. DPIIT Secretary Amardeep Singh Bhatia said India attracted record investments over the past decade due to consistent policy reforms. “FDI touched an all-time high of $80.62 billion in 2024–25. We are hopeful that inflows in 2026 will exceed last year’s levels,” he said. Policy Reforms and Ease of Doing Business Drive Confidence The government has been reviewing and refining its FDI policy on a continuous basis, consulting industry stakeholders to make investment processes faster and more transparent. The Department for Promotion of Industry and Internal Trade (DPIIT) has held multiple stakeholder meetings this year, while Commerce and Industry Minister Piyush Goyal conducted consultations in November to identify ways to further streamline approvals. Key reform measures include:
- Simplified compliance norms
- Decriminalisation of minor industry-related offences
- Faster clearances and approvals
- Stable and predictable regulatory policies
These steps have helped maintain investor interest even as global capital flows weaken.
Trade Pacts Boost Long-Term Investment Outlook
India is also banking on a new generation of investment-linked trade agreements to support FDI growth.
The free trade agreement with the European Free Trade Association (EFTA), which came into force on October 1, 2025, includes a commitment of $100 billion in FDI over 15 years. On the very day the pact became operational, Swiss healthcare major Roche announced plans to invest 1.5 billion Swiss francs (around ₹17,000 crore) in India over five years.
Separately, New Zealand has committed $20 billion in investments under a trade pact scheduled to be implemented in 2026.
Global Firms Announce Large Investments
Several global technology and manufacturing giants have announced large-scale investment plans in India, reinforcing long-term confidence in the market.
- Microsoft plans to invest $17.5 billion by 2030 to build AI infrastructure and sovereign capabilities.
- Amazon has committed $35 billion over the next five years across quick commerce, cloud, and AI.
- Google will invest $15 billion over five years to set up an AI hub in India.
- Apple continues to expand manufacturing operations, while Samsung is scaling up its production footprint.
- ArcelorMittal Nippon Steel India plans to raise colour-coated steel capacity to 10 lakh tonnes per year by 2026.
India Stands Out as Global FDI Slows
According to UNCTAD’s World Investment Report 2025, global FDI flows fell 11% in 2024 to $1.5 trillion. Developed economies saw a sharp 22% decline, while flows to developing economies remained broadly stable.
Asia, particularly India, East Asia and Southeast Asia, continued to attract strong project activity, highlighting India’s relative resilience in a slowing global investment environment.
Experts See Structural Strength Supporting FDI Revival
Economists and legal experts remain optimistic about India’s medium-term FDI outlook.
Deloitte India economist Rumki Majumdar said India’s strong fundamentals, policy stability and movement up the manufacturing and services value chain will attract long-term capital, particularly in software, electronics and services.
Rudra Kumar Pandey of Shardul Amarchand Mangaldas & Co noted that investments from Gulf Cooperation Council (GCC) countries are emerging as a durable pillar of India’s FDI landscape, while technology-led services—especially AI, data analytics, cloud infrastructure and Global Capability Centres—will remain key magnets for foreign capital.
Where FDI Is Coming From and Going To
Mauritius and Singapore remain India’s top investment sources, together accounting for about 49% of total inflows, followed by the US, the Netherlands, Japan and the UK.
Sectors attracting the highest FDI include:
- Services
- Computer software and hardware
- Telecommunications
- Trading
- Construction development
- Automobiles
- Chemicals and pharmaceuticals
While most sectors allow FDI through the automatic route, government approval is required in areas such as telecom, media, pharmaceuticals and insurance. Certain sectors—including gambling, chit funds, real estate trading and tobacco manufacturing—remain prohibited.
Why FDI Matters for India
Foreign direct investment is critical for funding India’s infrastructure ambitions, supporting industrial growth, maintaining balance-of-payments stability and strengthening the rupee. With the economy growing 8.2% in the second quarter of FY26, India appears well-positioned to convert policy reforms and global interest into sustained investment momentum.
As global capital becomes more selective, India’s combination of scale, stability and reform-driven growth places it in a strong position to attract higher-quality FDI in 2026 and beyond.
