Context:

• The United Nations Conference on Trade and Development (UNCTAD) has released the World Investment Report 2026, titled "International Investment in a Turbulent Era."

Key Highlights:

• • Publishing Organization: United Nations Conference on Trade and Development (UNCTAD).
• • Report Title: International Investment in a Turbulent Era.
• • Top FDI Recipient Country: The United States (USA) remained the world's largest FDI destination, followed by Singapore, Hong Kong (China), and China.
• • Global Foreign Direct Investment (FDI) Flows: Global FDI increased by 6% in 2025 to US$1.6 trillion, ending two consecutive years of decline.
• • Top Recipient Region: Developing Asia remained the largest recipient region with US$644 billion, accounting for nearly 40% of global FDI flows.
• • India became the 11th largest recipient of Foreign Direct Investment (FDI) in the world in 2025, improving from 13th position in 2024.
• • FDI inflows into India increased by 44%, rising from US$27.09 billion in 2024 to US$38.89 billion in 2025.
• • This improvement helped India regain its position after dropping out of the global Top 10 two years earlier.
• • The report highlighted India's policy initiatives aimed at attracting investments in manufacturing, infrastructure, advanced technologies, and global value chains (GVCs).
• • While FDI flows increased by only 2% in developing economies and 3% in Developing Asia, India recorded a robust 44% growth.
• • The United States remained the world's largest FDI recipient with US$277 billion, while China ranked fourth with US$104.66 billion in 2025.
• • The value of announced Greenfield investment projects in India declined from US$111.14 billion in 2024 to US$74.12 billion in 2025.
• • Despite this decline, India attracted the world's largest announced Greenfield investment project in 2025, with Alphabet Inc. announcing a US$14.5 billion data centre investment.
• • Poland-based Hynfra announced a US$4 billion investment in Andhra Pradesh.
• • India's outward FDI increased by 47%, rising from US$24.26 billion in 2024 to US$35.66 billion in 2025.
• • The increase in outward FDI helped India rank 18th among the world's leading outward FDI investing countries.
• • According to the report, despite tariff uncertainties, supply chain realignment, and weak global investment sentiment, India's investment-friendly policies continued to support strong FDI inflows.
• Foreign Direct Investment (FDI) in India
• Foreign Direct Investment (FDI) refers to an investment in which a company or individual from one country acquires a lasting business interest in a company located in another country or establishes a new business there.
• • FDI in India is regulated under the Foreign Exchange Management Act (FEMA), 1999.
• • Policy Formulation: Department for Promotion of Industry and Internal Trade (DPIIT).
• • Administration: Reserve Bank of India (RBI).
• • Rule: According to international standards, if a foreign investor acquires 10% or more equity in a listed Indian company, it is treated as FDI; an investment of less than 10% is classified as Foreign Portfolio Investment (FPI).
• • Regulatory Framework: India's FDI policy is formulated by DPIIT and administered by the RBI under the provisions of FEMA, 1999.
• Two Routes for FDI in India

Foreign companies can invest in India through two routes:

• Automatic Route: Under this route, foreign investors do not require prior approval from the Government of India or the RBI before making investments. More than 90% of FDI enters India through this route.
• Government Route: Under this route, prior approval from the concerned Ministry or Government Department is mandatory before investment. Applications are submitted through the National Single Window System (NSWS) portal.

FDI Limits in Major Sectors

Sectors Where FDI Is Completely Prohibited

• Lottery business (Government or Private).
• Gambling and Betting (including Casinos).
• Chit Funds and Nidhi Companies.
• Atomic Energy.
• Manufacturing of Tobacco Products (Cigars, Cigarettes, etc.).
• Railway Operations (Railway Infrastructure is permitted up to 100% FDI).

Top Sources of FDI into India

• Mauritius.
• Singapore.
• United States.
• Netherlands.
• Japan.