India Aims for $100 Billion FDI Inflows in Coming Years as Investment Climate Improves

India Aims for $100 Billion FDI Inflows in Coming Years as Investment Climate Improves

India is on track to increase its foreign direct investment (FDI) inflows to $100 billion annually in the near future, up from the current $70-80 billion per year, according to a senior official from the Department for Promotion of Industry and Internal Trade (DPIIT). Efforts are underway to streamline FDI approval processes, especially in sectors requiring government clearances.

Over the last decade (2014-2024), India has received FDI inflows of $667.4 billion, nearly doubling the $304.1 billion received during the previous 10 years (2004-2014). Key sectors such as automobiles, telecommunications, and pharmaceuticals have been major recipients of these investments. The government’s continued efforts to liberalize FDI policies in industries like defense, railways, insurance, and telecom have been pivotal in boosting these figures.

During the first quarter of the current fiscal year, India attracted $22.49 billion in FDI, up from $17.56 billion in the same period last year, indicating a positive trend. DPIIT officials highlighted that easing regulatory norms and fostering a positive business environment have been instrumental in achieving this growth. The defense sector, in particular, has seen substantial investments awarded to domestic companies, contributing to a stronger ecosystem for manufacturing.

As for Chinese investments, current policies remain unchanged, requiring government approval for FDI from countries sharing land borders with India, including China. While FDI inflows from China have been minimal, bilateral trade between the two countries has continued to expand, with China emerging as India's largest trading partner in the previous fiscal year. Despite geopolitical tensions, India's trade deficit with China widened, reaching $85 billion in 2023-24.

The government also reported that its production-linked incentive (PLI) schemes launched in 2020 have resulted in significant investments of Rs 1.32 lakh crore and a notable increase in manufacturing output, further solidifying India's position as a global manufacturing hub.