Gross foreign direct investment (FDI) inflows are set to surpass $90 billion in financial year 2025-26, bringing India another step closer to a landmark moment in its investment journey. According to Chief Economic Advisor V Anantha Nageswaran, FDI inflows have already topped $88 billion in the April-February period, and, barring the last month to close the financial year, the figure is set to not only breach $90 billion but also to exhibit a strong upward bias. This would mark a breakout from the more steady-state of $70-$80 billion seen in the preceding four years, and an increase of about 10 percent on FY25, cementing India’s status as one of the world’s top foreign investment hotspots.
This spike is crucial as it could elevate the level of foreign investment to about 2 percent of India’s GDP for the first time in a fiscal year, and also mark a broadening in investment participation. Nageswaran highlighted that the ongoing trend debunks the pessimistic view on the ability of India to sustain higher levels of FDI inflows. This trend reflects that regardless of global challenges and investment shifts, India remains an attractive destination with its large market, growth opportunities and supportive policies.
Reserve Bank of India data shows growth in gross and net FDI inflows for FY26. Gross inward FDI spiked upwards by 18.1 percent to $88.3 billion in April-February this year from the previous year. More significantly, net FDI, which considers the repatriation (or outflow) and foreign direct investments (outflow), has risen to $6.3 billion compared to $1.5 billion in the same period last year. Things improved in February when net FDI became positive for the first time after six months of negative growth, with higher inflows and lower repatriation. This suggests not only increased inflows but also capital retention in the Indian economy.
Modest inflows have been broad based but focused on high growth sectors. The manufacturing, computer services, financial services, business services and communication sectors combined share in excess of two-thirds of the total equity inflows this fiscal. This highlights both India’s effort to build on manufacturing as part of initiatives such as “Make in India” and its strong services sector in particular in digital and financial sectors. The inclusion of computer and financial services also reflects the growing importance of digital economy and innovation-driven growth in drawing in foreign investment.
The major source markets for foreign investments include Singapore, United States, Mauritius, Japan and the Netherlands, which together constitute some three-quarters of the FDI inflows. This reflects the strong investment relationship between the countries – as well as India’s role in global capital markets. At the same time, greenfield investment activity is strong, showing investors’ commitment to long-term investment in India. FDI Markets reports that greenfield project announcements totalled around $65 billion in April-January FY26, a marginally lower figure than $73 billion in the same period of the previous financial year, but still pointing to a healthy pipeline.
Investment announcements by global players such as Amazon, Microsoft, Google, General Catalyst and MUFG Bank in key sectors such as information technology and banking, also bolster confidence in India’s economic future. These (investments) not only represent foreign investment but also new technology, employment, and ecosystem which all contribute to their multiplier effect.
This continued pace is underpinned by government policy. In the Budget session of Parliament, Minister of State for Commerce and Industry Jitin Prasada emphasised reforms to improve the investment environment. India’s position as the 15th largest FDI host country in the world (ranked 16 in 2023) shows modest but incremental improvement, as per UNCTAD’s World Investment Report 2025. Reforms including the reduction of regulatory compliances, faster approvals and improvement in ease of doing business have played a role in this.
The “Regulatory Compliance Burden” reduction program alone has eliminated 42,376 compliances from more than 670 acts, reducing the compliance burden on businesses. Moreover, the Jan Vishwas Act 2023 has decriminalised 183 provisions in 42 central laws and a similar bill in 2026 has substituted imprisonment with civil penalties or fine in over 780 provisions in 79 acts. These measures reflect a trend towards a ‘faith-based’ economic system for sustainable foreign investment.
In all, the likely surpassing of the $90 billion milestone in FY26 is more than just a statistical achievement. It is a testament to a balance of macroeconomic stability, reforms, sectoral growth and the confidence of global investors. As India works to build capacity in its manufacturing sector and develop its digital economy, FDI inflows will continue to be a barometer of how deeply India is embedded into the global economy, and how it plans to become a high growth economy in the years ahead.
