Media365
India attracted $39 billion in foreign direct investment (FDI) in 2025, marking a 44 per cent increase from the previous year and reinforcing its position as one of the world’s leading investment destinations, according to the latest World Investment Report 2026 released by the United Nations Conference on Trade and Development (UNCTAD).
The report showed that India climbed to become the world’s 11th-largest recipient of FDI last year, benefiting from strong investor interest even as global investment conditions remained uncertain due to geopolitical tensions and trade policy risks.
FDI inflows into India rose from $27 billion in 2024 to $39 billion in 2025, driving a sharp increase in investment across South Asia. Total FDI inflows into the region rose from $34 billion to $46 billion during the year, largely led by India’s performance.
Globally, FDI flows increased 6 per cent to $1.6 trillion in 2025 after two years of weakness. Developed economies recorded an 11 per cent rise in inflows, while developing economies posted a more modest 2 per cent increase.
India remains a preferred investment destination
UNCTAD said India continued to strengthen its position as a major investment destination through a combination of policy reforms and manufacturing incentives.
The report credited initiatives such as the Production-Linked Incentive (PLI) scheme, Make in India, Start-up India and the National Industrial Corridor Development Programme for attracting investment into sectors including electronics, semiconductors and advanced manufacturing.
It also highlighted reforms aimed at improving the ease of doing business, including the National Single Window System, the India Industrial Land Bank, liberalised FDI rules and institutional mechanisms designed to speed up project approvals.
According to UNCTAD, these measures helped broaden India’s investment base beyond services while supporting the country’s growing role in global value chains, particularly in electronics manufacturing.
Greenfield investment slows despite higher inflows
Despite the strong rise in overall FDI inflows, the report warned that project-level indicators suggest a more cautious investment cycle is emerging.
The total value of announced greenfield investment projects in India fell sharply to around $74 billion in 2025 from more than $111 billion a year earlier. The number of announced projects also declined marginally.
Manufacturing accounted for most of the slowdown. Announced manufacturing investment dropped from around $65 billion in 2024 to about $27 billion in 2025.
UNCTAD said the decline was concentrated in capital-intensive industries, where investment values fell significantly even though the number of projects declined only moderately, indicating that companies were committing smaller amounts of capital rather than abandoning projects altogether.
Electronics manufacturing nevertheless remained among the country’s largest manufacturing sectors by both project value and number of investments.
Services sector emerges as key growth driver
While manufacturing investment weakened, services continued to attract steady foreign investment.
The report noted that greenfield investment in services remained broadly stable and exceeded manufacturing investment in 2025. Information and communication technology (ICT) emerged as the largest investment sector, reflecting continued expansion in digital infrastructure and technology-related businesses.
Financial services also saw renewed investment activity during the year.
UNCTAD said global technology companies including Amazon, Google and Microsoft continued investing in hyperscale data centres across developing Asia, with India among the leading destinations alongside Malaysia and Indonesia.
Global uncertainties cloud outlook
Although India’s policy framework remains focused on advanced manufacturing, infrastructure development and deeper integration into global supply chains, UNCTAD cautioned that external headwinds could weigh on future investment decisions.
The report said growing tariff uncertainty, supply chain realignment, geopolitical conflicts and weaker global investor sentiment are affecting the scale of new manufacturing and infrastructure commitments worldwide.
It added that while manufacturing remains central to FDI across developing Asia, investment is increasingly shifting towards high-technology industries and the digital economy.
For 2026, UNCTAD expects the global investment outlook to remain fragile as businesses continue to navigate trade tensions and geopolitical risks, even as countries compete aggressively to attract strategic foreign investment.
