How India Attracted $81 Billion in FDI in 2024-25
India’s FDI Hits $81 Billion in FY24-25
India recorded $81.04 billion in Foreign Direct Investment (FDI) in FY 2024-25, a 14% jump from $71.28 billion in FY23-24. This is the highest in three years, driven by services and manufacturing.
Last year’s FDI inflow was not $750 billion; cumulative FDI from April 2000 to March 2025 reached $1.07 trillion. Maharashtra and Karnataka led, attracting $19.6 billion and $6.62 billion, respectively. Singapore topped the investor list with $15 billion.
Background of India’s FDI Surge
India’s FDI growth stems from economic reforms and investor-friendly policies. The government has streamlined approvals, with 100% FDI allowed in most sectors under the automatic route.
Manufacturing FDI rose 18% to $19.04 billion in FY25. Services, including finance and IT, accounted for 19% of equity inflows. Global trust in India’s market, coupled with infrastructure improvements, has fueled this rise. The number of investing countries grew from 89 in FY13-14 to 112 in FY24-25.
History of India Opening to FDI
India began liberalizing FDI in 1991 under economic reforms. Initially, FDI was capped in key sectors like telecom and retail.
The 2000s saw gradual easing, with 100% FDI allowed in sectors like IT and pharmaceuticals. Post-2014, reforms accelerated, permitting 100% FDI in defense, railways, and insurance. The 2025 Union Budget raised FDI limits in insurance to 100% for firms investing premiums domestically. These changes made India a top FDI destination.
Major FDI Examples in India
Major FDI inflows include tech and manufacturing giants. In 2020, Facebook invested $5.7 billion in Jio Platforms, boosting India’s digital economy.
Amazon and Google have poured billions into India’s e-commerce and cloud services. In FY24-25, the pharma sector saw $2.3 billion in FDI, driven by the Production-Linked Incentive (PLI) scheme. German chemical firm BASF announced a $1.5 billion investment in 2025. Walmart’s acquisition of Flipkart for $16 billion in 2018 remains a landmark deal.
FDI’s Contribution to India’s GDP
FDI contributes about 2.1% to India’s GDP in FY24-25, consistent with the 2000-2025 average. While gross FDI hit $81 billion, net FDI fell to $353 million due to $51.5 billion in repatriations.
FDI supports India’s Current Account Deficit and capital formation, driving economic growth. Sectors like manufacturing and services create jobs and boost exports. However, net FDI’s decline to 0.01% of GDP highlights challenges in retaining investments.
Challenges
Despite the FDI boom, challenges persist. Repatriations rose to $51.5 billion in FY25, reducing net FDI. Global economic uncertainties led to a 24.5% drop in FDI to $9.34 billion in Q4 FY25.
Press Note 3 of 2020, requiring approvals for FDI from neighboring countries like China, slows investments. The government is easing these rules and signing free trade agreements to attract more FDI. Experts predict continued growth if reforms deepen.
India’s $81 billion FDI in FY24-25 underscores its global appeal, but sustaining net inflows requires tackling repatriations and regulatory hurdles. With a strong reform track record and diverse investments, India remains a prime destination for foreign capital.
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