Reference:

• According to the Ministry of Commerce and Industry, the country has witnessed a consistent increase in FDI inflows.

Key Points:

• The government has implemented investor-friendly Foreign Direct Investment (FDI) policies, under which most sectors are open to 100% FDI through the automatic route.
• These policies are continuously reviewed to ensure that India remains an attractive and competitive investment destination.
• As a result, FDI inflows have seen steady growth.

Increase in FDI Inflow:

• 2013–14: USD 36.05 billion
• 2024–25: USD 81.04 billion (14% increase)
• Last 11 years (2014–25): USD 748.78 billion (143% increase)

Sectoral Contribution:

• Services Sector: 19% (USD 9.35 billion, 40.77% growth)
• Computer Software and Hardware: 16%
• Trading: 8%
• Manufacturing Sector: USD 19.04 billion (18% growth)

State-wise Contribution:

• Maharashtra: 39%
• Karnataka: 13%
• Delhi: 12%

Source Countries:

• Singapore: 30%
• Mauritius: 17%
• United States: 11%
• Number of source countries: Increased from 89 (2013–14) to 112 (2024–25)

Policy Reforms:

• 2014–2019: Increased FDI limits in defence, insurance, and pensions
• 2019–2024: 100% FDI permitted in coal mining and contract manufacturing
• 2025: Proposal for increasing FDI in insurance from 74% to 100%

Foreign Direct Investment (FDI):

• FDI is an investment wherein a company or individual from one country invests capital in a company or business entity in another country and acquires a significant stake in its management (usually at least 10% shareholding).

Types of FDI:

• Greenfield Investment: A foreign company starts a new business or project in another country, such as setting up a factory or office.
• Brownfield Investment: A foreign company acquires or purchases stakes in an existing local company.
• Joint Venture: A foreign and a local company together start a business.
• Reinvestment: Profits earned by a foreign company are reinvested in the same country.

FDI Policy in India:

• The Government of India has implemented investor-friendly policies:
• Automatic Route: 100% FDI is allowed in many sectors without government approval, such as manufacturing, IT, and e-commerce.
• Government Route: FDI in sectors such as defence, insurance, and media requires government approval.
• Prohibited Sectors: FDI is entirely prohibited in sectors like lottery, gambling, and atomic energy.

Benefits of FDI:

• Economic Development: Capital inflow aids infrastructure and industrial development.
• Employment Generation: New projects and businesses create job opportunities.
• Technology Transfer: Foreign companies bring advanced technologies and management practices.
• Global Integration: FDI enhances India's participation in global trade and investment networks.